Balanced portfolio with strong U.S. equity focus and moderate international diversification

Report created on Dec 12, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a significant 65% allocation to the Vanguard S&P 500 ETF. This indicates a strong emphasis on large-cap U.S. equities. Additionally, it includes a 15% stake in Avantis U.S. Small Cap Value ETF, providing exposure to smaller domestic companies, and a 10% allocation to the Invesco NASDAQ 100 ETF, focusing on tech-heavy growth stocks. The remaining 10% is invested in the Vanguard Total International Stock Index Fund ETF, offering international exposure. This composition suggests a balanced approach, emphasizing growth through large-cap and tech stocks while maintaining some diversification through small-cap and international equities.

Growth Info

The portfolio has demonstrated a strong historic performance with a compound annual growth rate (CAGR) of 16.32%. This impressive return suggests that the portfolio has capitalized on favorable market conditions, particularly within the U.S. equity market. However, it's important to note that past performance does not guarantee future returns, as market conditions can change. The maximum drawdown of -24.27% highlights the potential risk during downturns. To manage this risk, investors could consider maintaining a diversified asset mix and regularly reviewing their portfolio to ensure it aligns with their risk tolerance and financial goals.

Projection Info

Using Monte Carlo simulations, which rely on historical data to project potential future outcomes, the portfolio exhibits a favorable outlook. With a median projected return of 639.81% and a 67th percentile outcome of 942.75%, the simulations suggest a wide range of potential returns. While these projections are useful for understanding potential future performance, they are not predictions and should be interpreted with caution. Investors should consider these simulations as one of many tools to guide their investment decisions, acknowledging the inherent uncertainty in future market movements.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.77% of the total assets, with minimal allocations to cash and other asset classes. This concentration in equities suggests a focus on growth and capital appreciation, which can lead to higher returns over time. However, it also increases exposure to market volatility. To enhance diversification, investors might consider incorporating other asset classes such as bonds or real estate, which can provide stability and reduce overall portfolio risk. Balancing growth with stability can help achieve a more resilient investment strategy.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is notably concentrated in technology at 28.82%, followed by financial services and consumer cyclicals. This heavy tech focus aligns with recent trends of strong growth in the sector but may expose the portfolio to sector-specific risks. Diversifying across more sectors could mitigate these risks and provide a more balanced exposure to different economic cycles. Investors should assess whether this concentration aligns with their risk tolerance and consider adjusting sector allocations to achieve a more evenly distributed risk profile.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With 89.83% of the portfolio allocated to North America, there is a clear preference for U.S. equities. While this can be beneficial given the strong performance of the U.S. market, it also subjects the portfolio to regional risks. The remaining exposure is spread thinly across Europe, Asia, and other regions, offering limited international diversification. To reduce geographic risk, investors might consider increasing allocations to emerging markets or other developed regions, which can provide opportunities for growth and help balance the portfolio against U.S.-centric risks.

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.

Click on the colored dots to explore allocations.

The portfolio can potentially be optimized using the Efficient Frontier, which focuses on achieving the best possible risk-return ratio with the current assets. This involves adjusting the weightings among the existing ETFs to find a more efficient allocation. By doing so, investors might enhance returns without increasing risk or maintain current returns while reducing risk. However, this optimization is limited to the assets already in the portfolio and does not consider adding new ones. Regularly reviewing and rebalancing the portfolio can help maintain its efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.36%

The portfolio offers a modest dividend yield of 1.36%, mainly contributed by the Vanguard Total International Stock Index Fund ETF with a yield of 2.9%. While dividends provide a steady income stream, this portfolio's focus appears to be more on capital appreciation through growth-oriented stocks. Investors seeking higher income might consider increasing their allocation to dividend-paying stocks or funds. Balancing growth and income can help achieve a diversified return profile, catering to both short-term income needs and long-term capital growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is relatively low at 0.08%, reflecting the cost-efficient nature of ETFs. This low cost is beneficial for long-term investors, as it minimizes the drag on returns. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, contributes significantly to this efficiency. While costs are already minimized, investors should remain vigilant about any changes in fund fees and continue to seek cost-effective investment options. Keeping expenses low is crucial for maximizing net returns over time.

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