A balanced highly diversified portfolio with strong North American focus and moderate risk levels

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of equity ETFs, with a significant allocation to large-cap U.S. stocks. Each of the three major ETFs—Invesco NASDAQ 100, Schwab U.S. Dividend Equity, and Vanguard S&P 500—holds a 23% share. Additionally, there is a 10% allocation to short-term treasury bonds, providing a cushion against volatility. This composition highlights a preference for stability and growth, balancing between high-growth tech stocks and dividend-paying equities. A smaller portion is allocated to international and emerging markets, indicating a moderate risk appetite. Consider reviewing the weightings regularly to ensure they align with evolving market conditions and personal investment goals.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 12.66%, which is impressive for a balanced profile. However, it also experienced a maximum drawdown of nearly 23%, reflecting its exposure to market volatility. Understanding past performance helps set realistic expectations, but it's essential to remember that it doesn't guarantee future results. Market conditions can change, and past trends may not repeat. To mitigate potential downturns, consider maintaining a diversified mix of assets and regularly reviewing the portfolio's risk exposure.

Projection Info

Using Monte Carlo simulations, this portfolio's future performance was projected under various market conditions. The simulations, which utilize historical data, show a wide range of potential outcomes, with an annualized return of 10.27%. While the median outcome suggests significant growth, it's important to remember that these are estimates based on past data and assumptions. They provide a glimpse into possible future scenarios but aren't foolproof. Regularly review the portfolio's performance and adjust allocations as needed to stay aligned with your goals and risk tolerance.

Asset classes Info

  • Stocks
    90%
  • Cash
    6%
  • Bonds
    4%

With nearly 90% invested in stocks, this portfolio leans heavily towards equities, offering potential for growth but also increased volatility. The remaining allocations are in bonds and cash, providing some stability and liquidity. This mix is suitable for those comfortable with moderate risk, seeking capital appreciation over the long term. Diversification across asset classes helps reduce risk, but it's crucial to periodically reassess the balance, especially during market shifts. Consider adding more bonds or cash if a more conservative approach is desired.

Sectors Info

  • Technology
    25%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    8%
  • Telecommunications
    8%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is diversified across multiple sectors, with a notable concentration in technology, making up almost 25%. This focus can drive growth but also exposes the portfolio to sector-specific risks. Other significant sectors include financial services, consumer cyclicals, and healthcare. While this diversification helps manage risk, it's essential to monitor sector performance and adjust allocations as market conditions change. Consider rebalancing if any sector becomes overly dominant, or if emerging opportunities arise in other areas.

Regions Info

  • North America
    69%
  • Asia Emerging
    7%
  • Europe Developed
    5%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising over 69% of the total allocation. This concentration offers stability and familiarity but limits exposure to international markets. Smaller allocations to Asia, Europe, and emerging markets provide some diversification and potential for higher returns. However, geopolitical risks and currency fluctuations can impact these investments. To enhance geographic diversification, consider gradually increasing exposure to other regions, balancing potential growth with risk management.

Redundant positions Info

  • iShares Core MSCI Emerging Markets ETF
    Vanguard FTSE Emerging Markets Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly within emerging markets ETFs. This correlation means these assets tend to move in the same direction, reducing diversification benefits. While correlation isn't inherently negative, it can increase risk if the assets underperform simultaneously. To improve diversification, consider reducing the overlap by selecting ETFs with different regional or sector focuses. This adjustment can help manage risk and potentially enhance returns by spreading exposure across more independent market segments.

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 be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This method doesn't necessarily focus on diversification but rather on maximizing returns for a given level of risk. Before optimizing, it's crucial to address the overlap between highly correlated assets, as they don't contribute to diversification. Adjusting allocations among existing assets can enhance efficiency, potentially improving returns without increasing risk. Regularly reassess the portfolio to ensure it remains aligned with your risk tolerance and financial goals.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • iShares Core MSCI Emerging Markets ETF 2.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 2.50%
  • iShares Short Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 2.09%

The portfolio's dividend yield stands at 2.09%, offering a modest income stream. The Schwab U.S. Dividend Equity ETF and the iShares Short Treasury Bond ETF are notable contributors, with 2.5% and 5.1% yields, respectively. Dividends can provide a steady income and help cushion against market volatility. However, relying solely on dividends for returns can limit growth potential. Consider balancing between dividend-paying and growth-oriented assets to achieve both income and capital appreciation, depending on your financial goals and needs.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • iShares Core MSCI Emerging Markets ETF 0.09%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares Short Treasury Bond ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

With a total expense ratio (TER) of 0.1%, this portfolio is cost-effective, minimizing the impact of fees on long-term returns. Lower costs mean more of your investment gains stay in your pocket, compounding over time. While the Avantis International Small Cap Value ETF has a higher expense ratio, it remains a small portion of the portfolio. Regularly review the cost structure and explore lower-cost alternatives if available, but ensure they align with your investment strategy and desired exposure.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey