A broadly diversified cautious portfolio with a strong focus on US equities and low costs

Report created on Dec 24, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is structured with a strong emphasis on equity, comprising 66.5% in stocks, primarily through the Vanguard Total Stock Market Index Fund ETF. This allocation suggests a focus on growth while maintaining a cautious risk profile. Comparatively, the portfolio's diversification across asset classes like cash, real estate, bonds, and commodities aligns well with a balanced investment approach. This composition is broadly diversified, providing a stable foundation that reduces specific asset risk. Consider maintaining this allocation to ensure continued broad exposure, while periodically reviewing asset class performance to adapt to market changes.

Growth Info

Historically, the portfolio has delivered a CAGR of 12.79%, which is commendable and suggests effective growth over time. This performance outpaces many conservative benchmarks, indicating a well-chosen asset mix. However, the max drawdown of -20.23% reveals exposure to market volatility, which is typical for equity-heavy portfolios. While past performance is not a guarantee of future results, it offers insights into the portfolio's resilience. Continue monitoring performance against relevant benchmarks to ensure alignment with your risk tolerance and investment goals.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, with a 50th percentile projection of 231.94% growth. This method uses historical data to model future possibilities, providing a probabilistic view of returns. While the median projection appears optimistic, it's crucial to recognize the inherent uncertainty in forecasting. The simulation's outcomes suggest a high likelihood of positive returns, reinforcing the portfolio's growth potential. Regularly review projections to adjust strategies as needed, keeping in mind that these are estimates based on past data.

Asset classes Info

  • Stocks
    67%
  • Cash
    15%
  • Real Estate
    10%
  • Bonds
    8%

The portfolio's allocation across four major asset classes—stocks, cash, real estate, and bonds—demonstrates a strategic approach to diversification. The 66.5% stock allocation aligns with a growth-oriented strategy, while cash and bonds provide stability. Real estate adds another layer of diversification, offering potential income and inflation protection. This balance is well-suited for cautious investors seeking to mitigate risk while pursuing growth. Consider periodically rebalancing to maintain desired asset class proportions, ensuring alignment with evolving market conditions and personal goals.

Sectors Info

  • Technology
    18%
  • Real Estate
    12%
  • Financials
    10%
  • Health Care
    7%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

Sector allocation reveals a notable concentration in technology at 17.6%, followed by real estate and financial services. This mirrors common market benchmarks, indicating a diversified sector exposure. A tech-heavy allocation may increase volatility, especially during economic shifts or interest rate changes. However, the inclusion of diverse sectors like healthcare and consumer cyclicals helps balance this risk. Maintain awareness of sector trends and consider adjusting weights to capitalize on emerging opportunities or reduce exposure to underperforming areas.

Regions Info

  • North America
    61%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly North American, at 61.1%, with limited exposure to other regions. This concentration may reduce diversification benefits and increase vulnerability to regional economic downturns. While the focus on North America aligns with many US-based investors' preferences, consider increasing exposure to international markets to enhance diversification. This can help capture growth opportunities in emerging markets and reduce reliance on any single region's economic performance.

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's current risk-return profile could be optimized using the Efficient Frontier, which suggests a more efficient allocation could achieve a return of 2.80% with a risk level of 0.28%. This optimization focuses on maximizing returns for a given risk level by adjusting asset weights. While the current portfolio is well-aligned with your cautious risk tolerance, exploring optimization strategies might reveal opportunities for improved performance. Consider consulting a financial advisor to identify potential adjustments that align with your long-term goals.

Dividends Info

  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.70%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 1.56%

The portfolio's total dividend yield is 1.56%, with contributions from various ETFs. Dividends provide a steady income stream, which is beneficial for cautious investors seeking regular cash flow. Higher-yielding assets like the iShares® 0-3 Month Treasury Bond ETF enhance this income potential. While dividends are a valuable component, ensure they align with your overall investment strategy and income needs. Consider reinvesting dividends to compound growth, or adjust holdings to increase yield if income generation becomes a priority.

Ongoing product costs Info

  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • The Real Estate Select Sector SPDR Fund 0.09%
  • Weighted costs total (per year) 0.16%

With a total expense ratio (TER) of 0.16%, the portfolio benefits from low costs, supporting better long-term returns. Lower fees mean more of your returns stay invested, compounding over time. The Vanguard funds, in particular, offer cost-effective exposure to broad markets. While the Direxion Auspice Broad Commodity Strategy ETF has a higher cost, it provides unique diversification benefits. Regularly review fund fees and explore alternatives to ensure cost efficiency, potentially enhancing net returns without sacrificing diversification.

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