A balanced portfolio with a tech-heavy focus and limited geographic diversification

Report created on Dec 15, 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 comprises four ETFs, with a significant focus on large-cap U.S. equities. Invesco NASDAQ 100 ETF and Vanguard S&P 500 ETF each make up 30% of the portfolio, while Schwab U.S. Dividend Equity ETF and Vanguard Russell 1000 Growth Index Fund ETF Shares each account for 20%. This composition suggests a strong emphasis on growth and dividends from established companies. A portfolio concentrated in a few ETFs can limit diversification benefits and expose it to market-specific risks. To enhance diversification, consider incorporating additional asset classes or sectors that are not currently represented.

Growth Info

Historically, the portfolio has shown a robust annual growth rate of 16.09%, despite experiencing a maximum drawdown of -26.91%. This indicates strong performance, albeit with periods of significant volatility. The high CAGR suggests that the portfolio has capitalized on the growth of large-cap U.S. equities over recent years. However, past performance is not always indicative of future results. To manage potential drawdowns, consider strategies like rebalancing or diversifying into less correlated assets that may cushion against market downturns.

Projection Info

The Monte Carlo simulation, with 1,000 iterations, projects a wide range of potential outcomes for the portfolio. The median (50th percentile) outcome is a 669.98% increase, while the 5th percentile shows a 141.19% increase, indicating a high probability of positive returns. Monte Carlo simulations use historical data to model future possibilities, but they cannot predict unforeseen market events. To prepare for various scenarios, maintain a diversified portfolio and consider adjusting allocations based on changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards equities, with 99.93% in stocks and a negligible 0.07% in cash. Such a concentration in a single asset class can increase exposure to equity market volatility. While equities offer growth potential, they also carry inherent risks. Balancing the portfolio with other asset classes, such as bonds or real assets, can provide stability and reduce overall risk. This mix can help cushion against stock market fluctuations and align the portfolio with a balanced risk profile.

Sectors Info

  • Technology
    37%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    9%
  • Financials
    9%
  • Consumer Staples
    7%
  • Industrials
    6%
  • Energy
    4%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation reveals a significant concentration in technology, comprising 37.43% of the portfolio. Other notable sectors include consumer cyclicals, communication services, and healthcare. While tech stocks have driven recent market gains, reliance on a single sector can increase vulnerability to sector-specific downturns. Diversifying into underrepresented sectors, such as energy or real estate, can mitigate this risk and enhance stability. A balanced sector allocation can improve resilience against economic cycles and sector-specific risks.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic exposure is overwhelmingly concentrated in North America, at 98.93%, with minimal allocations to Europe, Latin America, and Asia. This lack of geographic diversification limits exposure to international growth opportunities and increases vulnerability to U.S.-specific economic risks. Expanding geographic diversification can provide access to different economic cycles and growth prospects. Consider introducing international equities or emerging market funds to tap into global opportunities and reduce reliance on the U.S. market.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly between the Invesco NASDAQ 100 ETF and the Vanguard Russell 1000 Growth Index Fund ETF Shares. High correlation means these assets tend to move together, reducing diversification benefits. This can amplify risk during market downturns. To mitigate this, consider replacing one of the correlated ETFs with an asset that has a lower correlation to the rest of the portfolio. This adjustment can help achieve better risk management and enhance the portfolio's resilience.

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 asset allocation may not lie on the Efficient Frontier, which represents the optimal risk-return balance. High correlation among assets suggests potential inefficiencies. By adjusting the weightings of existing assets, the portfolio can potentially achieve a better risk-return profile. Optimization does not necessarily mean adding new assets; rather, it involves reallocating existing ones to improve efficiency. Consider employing portfolio optimization tools to explore different allocation scenarios and enhance overall performance.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 2.60%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.18%

The portfolio's average dividend yield stands at 1.18%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 2.6%. Dividends provide a steady income stream and can be reinvested to compound growth. However, the overall yield is modest, reflecting the portfolio's focus on growth-oriented ETFs. To enhance income, consider increasing exposure to high-dividend-paying stocks or funds. Balancing growth and income can provide a more stable return profile and support long-term financial goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, reflecting relatively low investment costs. Lower costs can significantly impact long-term returns by preserving more of the portfolio's gains. Cost efficiency is crucial for maximizing investment outcomes, especially in a low-yield environment. To maintain cost-effectiveness, regularly review the expense ratios of current holdings and explore opportunities to switch to lower-cost alternatives if available. This approach can enhance net returns and support long-term growth.

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