A balanced portfolio with high diversification and moderate risk focused on U.S. equities

Report created on Jan 20, 2025

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 predominantly composed of ETFs with a strong focus on equities, making up 89% of the total allocation. Bonds account for 10%, while cash holds a minimal 1%. This composition leans towards growth, aligning with a balanced risk profile. Compared to typical benchmarks, the portfolio is well-diversified across asset classes, which can help in managing risk and capturing growth opportunities. To maintain this balance, consider periodically reviewing the weightings to ensure they align with your evolving financial goals and market conditions.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.37%, which is robust for a balanced approach. The maximum drawdown was -30.92%, indicating exposure to significant market downturns. In comparison to benchmarks, this performance suggests solid growth potential with inherent volatility. It's essential to understand that past performance doesn't guarantee future results. Regularly reviewing performance relative to personal goals and market conditions can help in making informed decisions about potential adjustments.

Projection Info

The Monte Carlo simulation, a technique using historical data to project future outcomes, suggests a median portfolio growth of 259.8%. With 979 out of 1,000 simulations yielding positive returns, the outlook is optimistic. However, it's important to note that simulations are based on historical trends and assumptions, which may not reflect future market dynamics. Use these projections as a guide, but remain adaptable to changing market conditions and personal circumstances, possibly adjusting allocations to align with risk tolerance and financial objectives.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset class distribution is heavily weighted towards stocks, with a smaller allocation in bonds. This allocation provides growth potential but also exposes the portfolio to stock market volatility. Compared to benchmarks, the bond allocation is slightly lower, which may affect stability during market downturns. To enhance diversification and potentially reduce risk, consider increasing the bond allocation or exploring alternative asset classes that align with your risk tolerance and investment goals.

Sectors Info

  • Technology
    21%
  • Financials
    16%
  • Health Care
    11%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation reveals a significant concentration in technology at 21%, followed by financial services and healthcare. This composition is typical for growth-oriented portfolios but may expose the portfolio to sector-specific risks, such as tech volatility during interest rate changes. Aligning closely with benchmark sector weights can be beneficial, but consider whether this concentration matches your risk appetite. Diversifying into underrepresented sectors could help mitigate risks associated with sector-specific downturns.

Regions Info

  • North America
    67%
  • Asia Emerging
    8%
  • Europe Developed
    5%
  • Asia Developed
    4%
  • Japan
    2%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, accounting for 67% of the allocation. This focus aligns with common U.S.-centric benchmarks but may limit exposure to growth opportunities in other regions. Emerging markets and developed Europe have relatively low allocations. To enhance geographic diversification and potentially capture broader market growth, consider increasing exposure to international markets, keeping in mind the associated currency and geopolitical risks.

Market capitalization Info

  • Large-cap
    36%
  • Mega-cap
    33%
  • Mid-cap
    15%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization allocation is primarily in large-cap stocks, with big and mega caps making up 69%. This focus provides stability and lower volatility but may limit exposure to the high growth potential of smaller companies. Small and micro-cap stocks comprise a minor portion, which could be increased to enhance growth prospects. Balancing market cap exposure can help in optimizing risk-return dynamics, aligning with both stability and growth objectives.

Redundant positions Info

  • Vanguard Dividend Appreciation Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard Mega Cap Value Index Fund ETF Shares
    High correlation

The portfolio contains several highly correlated assets, which can limit diversification benefits. These assets, including various U.S. equity-focused ETFs, tend to move together, especially during market downturns. While correlation isn't inherently negative, high correlation may reduce the portfolio's ability to cushion against volatility. Consider diversifying into less correlated assets or sectors to enhance the portfolio's resilience and potential for risk-adjusted returns.

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 has potential for optimization using the Efficient Frontier, a concept that helps identify the best risk-return ratio for a given set of assets. To enhance efficiency, focus on reallocating between existing assets rather than introducing new ones. Reducing overlap among highly correlated assets can help achieve a more optimal balance. Remember, optimization is about enhancing risk-adjusted returns, not necessarily increasing diversification.

Dividends Info

  • iShares Core U.S. Aggregate Bond ETF 3.70%
  • Vanguard Mega Cap Value Index Fund ETF Shares 2.20%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.60%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 2.15%

With a total dividend yield of 2.15%, the portfolio provides a moderate income stream. Dividend-focused ETFs contribute significantly, offering stability and income, which can be appealing for income-oriented investors. While dividends are a valuable component, ensure that the yield aligns with your income needs and risk tolerance. Balancing growth and income can help achieve a well-rounded investment strategy, potentially enhancing long-term returns.

Ongoing product costs Info

  • iShares Core U.S. Aggregate Bond ETF 0.03%
  • Vanguard Mega Cap Value Index Fund ETF Shares 0.07%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.05%, supporting better long-term performance by minimizing costs. This cost efficiency is a significant advantage, allowing more of your returns to compound over time. Maintaining low costs is crucial for maximizing net returns, so continue to monitor and compare expense ratios when considering any new investments or changes to the portfolio.

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