A balanced US-focused portfolio with strong growth potential and low geographic diversification

Report created on Jan 4, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is composed of 40% Schwab U.S. Large-Cap Growth ETF, 40% Schwab Total Stock Market Index Fund, 10% Schwab U.S. Dividend Equity ETF, and 10% iShares 0-3 Month Treasury Bond ETF. The composition heavily favors U.S. equities, with a significant allocation to growth stocks. This allocation is typical for investors seeking capital appreciation with a moderate risk profile. However, the lack of exposure to international markets and bonds could limit diversification. To enhance resilience, consider adding more diverse asset classes, such as international equities or bonds, to balance growth with stability.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 17.07%, indicating robust performance. This is impressive compared to broad market benchmarks, reflecting strong returns from U.S. growth stocks. However, the portfolio also experienced a maximum drawdown of -26.34%, highlighting its vulnerability during market downturns. While past performance is not indicative of future results, it suggests the potential for high returns with significant risk. To mitigate drawdowns, consider incorporating assets that historically perform well in downturns, such as bonds or defensive equities.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a median return of 505.75% with an annualized return of 14.85%. While 997 out of 1,000 simulations resulted in positive returns, this method assumes past market conditions will persist, which is not guaranteed. These projections suggest substantial growth potential, but the range of outcomes also reflects inherent risk. To manage this risk, regularly review and adjust the portfolio in response to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    90%
  • Cash
    10%

The portfolio is predominantly allocated to stocks (89.7%), with a minor cash component (10.3%) and negligible bond exposure. This high equity concentration aligns with a growth-oriented strategy but may increase volatility. Compared to typical balanced benchmarks, which include a more significant bond allocation, this portfolio is less diversified across asset classes. To reduce volatility and enhance diversification, consider introducing more fixed-income securities, which tend to provide stability and income during market fluctuations.

Sectors Info

  • Technology
    33%
  • Financials
    10%
  • Health Care
    10%
  • Telecommunications
    9%
  • Consumer Discretionary
    7%
  • Industrials
    6%
  • Consumer Discretionary
    4%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio is heavily weighted towards technology (32.6%), followed by financial services and healthcare sectors. This sector concentration can drive performance but also introduces sector-specific risks. For example, tech-heavy portfolios may experience increased volatility during periods of interest rate hikes or regulatory changes. To achieve better sector diversification, consider reallocating some assets into underrepresented sectors like consumer staples or utilities, which can provide stability and reduce overall portfolio risk.

Regions Info

  • North America
    90%

The portfolio's geographic allocation is overwhelmingly North American at 89.6%, with minimal exposure to other regions. This limited geographic diversification can increase vulnerability to regional economic downturns or policy changes. Compared to global benchmarks, which typically include more diverse international exposure, this portfolio is highly concentrated. To diversify geographically and mitigate regional risks, consider adding international equities or funds that focus on emerging markets or developed economies outside North America.

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 Efficient Frontier suggests that this portfolio could be optimized for a better risk-return ratio by adjusting the allocation among existing assets. While the current setup offers high growth potential, there may be opportunities to enhance efficiency by slightly increasing bond exposure or diversifying sector allocations. This doesn't necessarily mean adding new assets but rather fine-tuning existing ones to achieve a more balanced risk-return profile. Regularly reviewing and rebalancing the portfolio can help maintain optimal efficiency.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Weighted yield (per year) 1.03%

With a total dividend yield of 1.03%, the portfolio generates modest income from dividends, primarily driven by the Schwab U.S. Dividend Equity ETF. While growth-focused portfolios often prioritize capital appreciation over income, dividends can provide a steady cash flow and reduce reliance on market performance for returns. If income generation is a goal, consider increasing exposure to dividend-paying stocks or funds, which can enhance overall yield and provide a cushion during market downturns.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • SCHWAB TOTAL STOCK MARKET INDEX FUND SELECT SHARES 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which supports better long-term performance by minimizing costs. Low fees are a significant advantage, as they allow more of the portfolio's returns to compound over time. This cost efficiency aligns well with best practices for cost-conscious investing. To maintain this advantage, continue monitoring fees and consider replacing any higher-cost funds with lower-cost alternatives if they offer similar exposure and performance potential.

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