A balanced portfolio with diverse asset classes and a focus on North American equities

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio consists mainly of ETFs, with a significant allocation to stocks at 85.5%, bonds at 9.9%, and smaller allocations to real estate and other assets. The largest holding is the Vanguard Total Stock Market Index Fund ETF Shares, which makes up 35% of the portfolio. This composition suggests a focus on growth through equities, complemented by bonds for stability. A diversified mix of asset classes helps manage risk by spreading investments across different financial instruments. To enhance stability, consider adjusting the allocation to include more bonds or other assets, depending on your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 10.93%, with a maximum drawdown of -31.76%. This indicates a strong performance over time, but it also highlights the potential for significant short-term losses. The portfolio's returns are concentrated, with 90% of returns occurring over just 18 days. This illustrates the importance of staying invested during volatile periods to capture gains. While past performance is not a guarantee of future results, maintaining a long-term perspective can help mitigate the impact of short-term market fluctuations.

Projection Info

Using Monte Carlo simulations, which estimate future performance by analyzing historical data, the portfolio has a 50th percentile projection of a 158.59% return and a 67th percentile projection of 267.54%. While the 5th percentile indicates a potential loss of -41.28%, 857 out of 1,000 simulations show positive returns, with an average annualized return of 9.47%. These projections provide a range of possible outcomes, helping to understand the risks and potential rewards. However, they rely on historical data and assumptions, which may not fully capture future market conditions. Regularly reviewing and adjusting the portfolio can help align it with changing market dynamics.

Asset classes Info

  • Stocks
    85%
  • Bonds
    10%
  • Real Estate
    3%
  • Other
    1%
  • Cash
    1%

The portfolio's allocation is heavily weighted towards stocks, making up 85.5% of the total. This focus on equities suggests a growth-oriented strategy, with bonds providing some balance and income. Real estate and other assets offer additional diversification, though their impact is limited due to smaller allocations. A diversified mix of asset classes can reduce risk by spreading investments across different areas of the market. To enhance diversification, consider increasing exposure to underrepresented asset classes, such as bonds or alternative investments, to create a more balanced risk-return profile.

Sectors Info

  • Technology
    21%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    8%
  • Real Estate
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%

Sector allocation is led by technology at 21.36%, followed by financial services and consumer cyclicals. This concentration in technology may drive growth but also introduces sector-specific risks. Diversification across sectors can mitigate these risks by reducing the impact of any single sector's downturn. Balancing exposure to defensive sectors, like consumer staples or utilities, with cyclical sectors can provide stability during economic fluctuations. Regularly reviewing sector allocations and making adjustments based on economic conditions and market trends can help optimize the portfolio's performance.

Regions Info

  • North America
    68%
  • Europe Developed
    7%
  • Asia Emerging
    5%
  • Japan
    3%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 67.8% exposure, followed by Europe and Asia. This concentration in North America may benefit from strong economic growth but also exposes the portfolio to regional risks. Geographic diversification can help mitigate these risks by spreading investments across different markets and economies. To enhance diversification, consider increasing exposure to underrepresented regions, such as emerging markets or other developed areas, which may offer growth opportunities and reduce reliance on any single region's 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 can be optimized using the Efficient Frontier, a concept that identifies the best risk-return trade-off. By adjusting the current asset allocations, it is possible to achieve a more efficient portfolio. This doesn't necessarily mean adding new assets but rather reallocating existing ones to improve the risk-return ratio. Efficiency in this context refers to maximizing returns for a given level of risk. Regularly reviewing the portfolio's efficiency and making necessary adjustments can help ensure it remains aligned with your financial goals and risk tolerance.

Dividends Info

  • Amplify Transformational Data Sharing ETF 0.60%
  • Vanguard Long-Term Bond Index Fund ETF Shares 4.40%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard Total International Bond Index Fund ETF Shares 4.70%
  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.40%
  • Schwab U.S. REIT ETF 1.90%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.90%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.90%
  • Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.95%

The portfolio's dividend yield is 1.95%, with contributions from various ETFs, including high-yield and bond-focused funds. Dividends can provide a steady income stream, enhancing total returns and offering some protection against market volatility. Reinvesting dividends can compound returns over time, contributing to long-term growth. To maximize income, consider increasing allocations to high-dividend or income-generating assets, taking into account the potential trade-offs with growth. Balancing growth and income needs can help align the portfolio with your financial goals and risk tolerance.

Ongoing product costs Info

  • ARK Innovation ETF 0.75%
  • Amplify Transformational Data Sharing ETF 0.76%
  • Vanguard Long-Term Bond Index Fund ETF Shares 0.04%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Bond Index Fund ETF Shares 0.07%
  • SPDR® Gold Shares 0.40%
  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.07%
  • Schwab U.S. REIT ETF 0.07%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, with costlier ETFs like ARK Innovation and Amplify Transformational Data Sharing ETF affecting overall costs. Lowering expenses can enhance long-term returns by reducing the drag on performance. Consider reviewing and potentially replacing high-cost ETFs with lower-cost alternatives that offer similar exposure. Cost efficiency is crucial in optimizing returns, especially over extended investment horizons. Regularly monitoring and managing expenses can help ensure the portfolio remains aligned with your financial objectives and maximizes value.

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