A balanced US-focused portfolio with heavy concentration in technology and low geographic diversity

Report created on Dec 11, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio consists entirely of ETFs, with each holding a similar weight of around 14-15%. These ETFs primarily focus on large-cap stocks, dividend growth, and market indices. The uniform weight distribution suggests an attempt at balance, but the lack of diversity in asset types limits potential risk management strategies. Having a broader range of asset classes could enhance the portfolio's resilience against market fluctuations. Consider incorporating different asset classes, such as bonds or real estate, to better manage risk and improve overall stability.

Growth Info

Historically, this portfolio has achieved a compound annual growth rate (CAGR) of nearly 15%, indicating strong past performance. However, it's important to note that past performance doesn't guarantee future results. The maximum drawdown of over 32% highlights potential vulnerability during market downturns. Investors should be prepared for such fluctuations. While the historical returns are impressive, consider reviewing the risk tolerance to ensure it aligns with the potential for significant value drops. Regularly reviewing and adjusting the portfolio can help mitigate risks.

Projection Info

Monte Carlo simulations project a range of potential outcomes using historical data, which helps visualize future possibilities. The simulations indicate a median return of 575.56%, with a 5th percentile return of 136.75%, suggesting a wide range of potential outcomes. While these projections offer insights, they are based on historical trends and assumptions, which might not hold in the future. Therefore, they should be used as one of many tools for decision-making. Regularly update these simulations to reflect current market conditions and adjust strategies accordingly.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in stocks, accounting for nearly 100% of the holdings. This singular focus on equities limits diversification and increases exposure to stock market volatility. Diversification across multiple asset classes, such as bonds or commodities, can help mitigate risks associated with market downturns. While stocks can offer growth potential, balancing them with other asset types can provide a more stable return over time. Consider introducing different asset classes to improve diversification and reduce overall risk exposure.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Consumer Staples
    8%
  • Telecommunications
    8%
  • Energy
    5%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The portfolio shows a significant concentration in the technology sector, making up over 30% of the holdings. While technology has been a strong performer historically, this heavy reliance increases vulnerability to sector-specific downturns. A more balanced sector allocation can reduce risk and enhance stability. Consider redistributing investments to include sectors that are less correlated with technology, such as healthcare or consumer staples, to achieve better diversification. This approach can help cushion the portfolio against sector-specific risks and improve long-term performance.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic allocation is overwhelmingly focused on North America, with over 99% exposure. This lack of geographic diversity limits the portfolio's ability to benefit from growth in other regions. Expanding geographic exposure can help capture opportunities in emerging markets and reduce dependence on a single economy. Consider allocating a portion of the portfolio to international markets, which can provide diversification benefits and access to different economic cycles. This strategy can help balance risks and enhance growth potential.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco QQQ Trust
    Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    iShares Core Dividend Growth ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The assets in this portfolio are highly correlated, meaning they tend to move in the same direction. This high correlation limits diversification benefits, as the portfolio is more likely to experience synchronized movements during market fluctuations. Reducing correlation by including assets that move independently can improve risk management and stability. Consider identifying and removing overlapping assets, and introducing investments with lower correlation to the existing holdings. This can help reduce overall portfolio volatility and improve the risk-return profile.

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 could be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weightings of current holdings to maximize returns for a given level of risk. However, optimization is limited to the existing assets and doesn't account for potential diversification benefits from new asset classes. Consider using optimization tools to rebalance the portfolio periodically, ensuring that it remains aligned with the desired risk-return profile. This can help improve efficiency without compromising other investment goals.

Dividends Info

  • iShares Core Dividend Growth ETF 2.20%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 2.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.40%

The portfolio's overall dividend yield stands at 1.4%, which provides a modest income stream. Dividend-paying stocks can offer a steady income and potentially enhance total returns, especially in volatile markets. However, the yield is relatively low, suggesting limited income potential. Consider increasing exposure to higher-yielding dividend stocks or funds to boost the income component. Balancing growth and income objectives can help achieve a more well-rounded investment strategy, catering to both capital appreciation and income needs.

Ongoing product costs Info

  • iShares Core Dividend Growth ETF 0.08%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.07%

The total expense ratio (TER) of the portfolio is 0.07%, which is quite low and favorable for long-term growth. Lower costs mean more of the portfolio's returns are retained, benefiting investors over time. However, it's important to regularly review and compare these costs with potential alternatives to ensure competitiveness. While maintaining low costs is beneficial, it shouldn't be the sole focus. Consider evaluating the performance and risk profile of current holdings against other options, ensuring that cost efficiency doesn't compromise overall investment quality.

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