A balanced portfolio heavily focused on US equities with low geographic diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with moderate risk tolerance and a focus on growth through US equities. It is ideal for those seeking capital appreciation over a medium to long-term horizon. While it offers potential for high returns, the limited diversification means investors should be comfortable with the associated volatility and regional concentration risks.

Positions

  • BlackRock S&P 500 Stock Fund Instl
    BSPIX - US0669235584
    75.31%
  • Fidelity Total Market Index Fund
    FSKAX - US3159116934
    10.36%
  • Vanguard High Dividend Yield Index Fund ETF Shares
    VYM - US9219464065
    8.31%
  • T. ROWE PRICE EQUITY INDEX 500 FUND T. ROWE PRICE EQUITY INDEX 500 FUND
    PREIX - US7795521084
    6.02%

This portfolio is predominantly composed of US equity funds with a small allocation to high dividend yield ETFs. The BlackRock S&P 500 Stock Fund dominates the portfolio, making up over 75%. Such concentration in a single asset type can limit diversification benefits, which typically help in reducing risk. A more balanced distribution across different asset types could enhance the portfolio's resilience against market fluctuations and economic downturns.

Growth Info

The portfolio has historically performed well, boasting a Compound Annual Growth Rate (CAGR) of 13.56%. This is impressive, especially when compared to the broader market indices. However, the maximum drawdown of nearly 34% highlights the potential risk during market downturns. While past performance is not indicative of future results, understanding these metrics can aid in setting realistic expectations and planning for potential volatility.

Projection Info

Using Monte Carlo simulations, which model potential future outcomes based on historical data, this portfolio shows promising results. The median (50th percentile) projection suggests a significant potential return of over 400%. However, it's crucial to remember that these projections are not guarantees. They provide a range of possible outcomes, helping investors understand potential risks and rewards, but real-world results can differ due to market unpredictability.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is almost entirely invested in stocks, with a negligible cash component. This heavy weighting in equities can offer high growth potential but also increases exposure to market volatility. Diversifying across different asset classes, like bonds or real estate, could provide more stability and reduce risk. Such diversification often aligns with balanced investment strategies aimed at achieving steady returns over time.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    9%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Consumer Discretionary
    1%

The portfolio is heavily weighted towards the technology sector, which comprises over 31% of the total allocation. While this can drive growth during tech booms, it also means the portfolio is more vulnerable to tech sector downturns. Balancing exposure across various sectors, such as healthcare or consumer goods, can mitigate sector-specific risks and provide more consistent performance across different economic cycles.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

The geographic allocation is overwhelmingly concentrated in North America, with minimal exposure to other regions. Such concentration can limit the benefits of geographic diversification, which can protect against regional economic downturns. Increasing exposure to international markets, including Europe and Asia, can offer growth opportunities and reduce regional risk, aligning the portfolio more closely with global benchmarks.

Redundant positions Info

  • BlackRock S&P 500 Stock Fund Instl
    Fidelity Total Market Index Fund
    T. ROWE PRICE EQUITY INDEX 500 FUND T. ROWE PRICE EQUITY INDEX 500 FUND
    High correlation

The portfolio's assets are highly correlated, particularly among the large-cap US equity funds. This means they tend to move in the same direction, reducing the diversification benefits typically desired in a balanced portfolio. Diversifying into less correlated assets can help cushion the portfolio during market downturns and provide a smoother investment experience through varied economic conditions.

Dividends Info

  • BlackRock S&P 500 Stock Fund Instl 0.80%
  • Fidelity Total Market Index Fund 0.20%
  • T. ROWE PRICE EQUITY INDEX 500 FUND T. ROWE PRICE EQUITY INDEX 500 FUND 0.80%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 0.90%

The portfolio's dividend yield is modest at 0.9%, with the Vanguard High Dividend Yield Index Fund contributing the most. Dividends can provide a stable income stream and enhance total returns, especially in low-growth environments. Investors seeking higher income might consider increasing their allocation to dividend-focused funds or exploring other income-generating assets.

Ongoing product costs Info

  • BlackRock S&P 500 Stock Fund Instl 0.10%
  • Fidelity Total Market Index Fund 0.02%
  • T. ROWE PRICE EQUITY INDEX 500 FUND T. ROWE PRICE EQUITY INDEX 500 FUND 0.19%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.09%

The total expense ratio (TER) of the portfolio is low at 0.09%, which is beneficial for long-term performance. Lower costs mean more of the returns stay in the investor's pocket, compounding over time. This cost efficiency is a positive aspect, suggesting that the portfolio is well-structured in terms of minimizing expenses, which is crucial for maximizing net returns.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

The portfolio could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. However, this requires addressing the high correlation among current holdings. By reallocating assets to less correlated investments, the portfolio could potentially improve its risk-adjusted returns, providing a better balance between growth potential and risk exposure.

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