A balanced portfolio with strong tech focus and impressive historical performance

Report created on Jan 30, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed predominantly of ETFs, making up 94% of the total allocation, with individual stocks comprising the remaining 6%. This structure reflects a mix of broad market exposure and targeted investments, aligning with a balanced risk profile. Compared to a typical benchmark, it leans heavily on U.S. equities, with significant allocations to the NASDAQ 100 and S&P 500. Such a composition provides diversification across large-cap stocks and international exposure, although the portfolio could benefit from a more varied asset class inclusion to enhance resilience against market volatility.

Growth Info

With a historical CAGR of 15.94%, this portfolio has delivered robust returns, outperforming many traditional benchmarks. However, it experienced a maximum drawdown of -18.15%, indicating vulnerability during market downturns. The concentration of returns over just 13 days suggests that timing plays a crucial role in its performance. While past performance is not a predictor of future results, understanding these trends can help in setting realistic expectations. Enhancing diversification could mitigate drawdown risks, potentially smoothing out returns over time.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential portfolio values. With a 50th percentile outcome of 813% and a 67th percentile of 1,247.4%, the future looks promising but uncertain. The high annualized return of 19.53% across simulations indicates potential for substantial gains. However, the 5th percentile at 102.7% highlights the risks involved. It's important to remember that simulations are not guarantees; they provide a spectrum of possibilities, underscoring the need for a diversified strategy to manage potential risks.

Asset classes Info

  • Stocks
    98%
  • No data
    2%
  • Cash
    1%

The portfolio is heavily weighted in stocks, accounting for 98% of the allocation, with minimal exposure to other asset classes. This concentration suggests a strong reliance on equity market performance. While stocks can offer substantial growth, they also come with higher volatility. Compared to a balanced benchmark, this portfolio might lack the stability provided by bonds or alternative investments. Introducing more asset classes could enhance diversification, potentially reducing risk and smoothing returns, particularly during periods of equity market turbulence.

Sectors Info

  • Technology
    34%
  • Consumer Discretionary
    15%
  • Telecommunications
    13%
  • Financials
    10%
  • Health Care
    7%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

With a 34% allocation to technology, the portfolio is significantly tech-heavy, which can lead to higher volatility, especially during periods of interest rate hikes. Other sectors such as consumer cyclicals and communication services are also well-represented. This sectoral concentration aligns with current market trends but could expose the portfolio to sector-specific risks. Balancing sector allocations could mitigate these risks, offering a more stable performance across various economic conditions. Consideration of defensive sectors might provide additional stability.

Regions Info

  • North America
    77%
  • Europe Developed
    8%
  • Asia Emerging
    7%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 77% of assets allocated there. This reflects a strong home bias, common in many U.S.-based portfolios. While this has been beneficial given the historical strength of the U.S. market, it may expose the portfolio to regional risks. Diversifying into other regions, particularly emerging markets, could enhance growth potential and reduce reliance on the U.S. economy. This approach might help in capturing diverse economic cycles and opportunities globally.

Market capitalization Info

  • Mega-cap
    54%
  • Large-cap
    31%
  • Mid-cap
    12%
  • Small-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap stocks, which make up 54% of the allocation. This focus on large companies can provide stability and lower volatility compared to smaller-cap stocks. However, it may limit growth potential, as smaller companies often offer higher returns. A more balanced approach across various market capitalizations could provide a blend of stability and growth, optimizing risk-adjusted returns. Including more mid and small-cap stocks could capture opportunities in less mature markets.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    JPMorgan Nasdaq Equity Premium Income ETF
    High correlation

The portfolio includes several highly correlated assets, such as the Vanguard S&P 500 ETF and Invesco NASDAQ 100 ETF, which tend to move together. This correlation can limit diversification benefits, as similar assets may react similarly to market events. Reducing these overlaps by introducing less correlated investments could enhance risk management. This approach can help in maintaining portfolio stability, especially during market downturns, by ensuring that not all assets are affected simultaneously.

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 focuses on achieving the best possible risk-return ratio. This involves adjusting the current asset allocation to enhance efficiency. While the portfolio is already diversified, removing overlapping assets could further improve its risk-return profile. Optimization does not guarantee diversification but aims to balance risk and reward effectively. Regularly reviewing and rebalancing the portfolio can help maintain its alignment with personal financial goals and market conditions.

Dividends Info

  • Alphabet Inc Class A 0.30%
  • iShares MSCI India ETF 0.80%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.14%

The portfolio's dividend yield stands at 2.14%, with contributions from ETFs like the JPMorgan Nasdaq Equity Premium Income ETF at 9.50%. Dividends can provide a steady income stream, particularly beneficial in volatile markets. However, the overall yield is modest, reflecting the growth-oriented nature of the holdings. For those seeking income, increasing exposure to higher-yielding assets might be worth considering. Balancing growth and income can cater to diverse financial goals, offering both capital appreciation and regular cash flow.

Ongoing product costs Info

  • iShares MSCI India ETF 0.65%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is impressively low and supports better long-term performance by minimizing costs. Lower fees mean more of your investment returns stay with you, compounding over time. Keeping costs low is crucial, especially for long-term investors, as it can significantly impact net returns. Regularly reviewing and optimizing expense ratios can ensure that the portfolio remains cost-effective, maximizing potential gains without unnecessary expenses eating into returns.

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