Balanced Portfolio with High Diversification and Strong Historical Performance for Moderate Risk Tolerance Investors

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits investors seeking a balanced approach with moderate risk tolerance. Ideal for those aiming for long-term growth, it offers broad diversification across asset classes and sectors. With a focus on equities, it caters to individuals with a growth mindset, while the bond allocation provides stability. Suitable for investors with a medium to long-term investment horizon, it balances potential returns with manageable risk. This portfolio is ideal for those comfortable with some market volatility in exchange for the opportunity to achieve above-average returns over time.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    25.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    15.00%
  • Invesco S&P MidCap Quality ETF
    XMHQ - US46137V4721
    15.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Vanguard Total World Bond ETF
    BNDW - US92206C5655
    10.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    10.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    5.00%
  • WisdomTree Emerging Markets SmallCap Dividend Fund
    DGS - US97717W2816
    5.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    5.00%

This portfolio is well-composed with a range of ETFs, providing a balanced approach between equities and bonds. With 89.67% in stocks and 9.86% in bonds, it leans towards growth while maintaining some stability through bonds. The inclusion of various ETFs ensures broad exposure across different markets and sectors, which can help mitigate risks associated with market volatility. This diversified composition is beneficial for achieving a balance between risk and return. Considering the current allocation, maintaining this diversified structure could be advantageous for long-term growth with manageable risk.

Growth Info

Historically, the portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 14.38%. This indicates that the portfolio has been able to capitalize on market opportunities effectively. However, it has also experienced a maximum drawdown of -24.69%, suggesting some vulnerability during market downturns. The concentration of returns in just 21 days highlights the importance of staying invested during volatile times to capture these gains. To continue benefiting from this performance, it's crucial to maintain a long-term perspective and not react hastily to short-term market fluctuations.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the 50th percentile projection shows a potential growth of 526.38%, while the 67th percentile suggests a more optimistic 768.56% increase. With 992 simulations yielding positive returns, the portfolio's future looks promising. However, it's essential to remember that these are estimates and actual performance may vary. Regularly reviewing and adjusting the portfolio according to changes in risk tolerance and financial goals can help in achieving desired outcomes.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio's asset class allocation is primarily in stocks, with a small portion in bonds and minimal cash holdings. This allocation is typical for a balanced portfolio aiming for growth with a moderate level of risk. The bond allocation provides some stability, reducing the overall volatility of the portfolio. While the current allocation supports growth, it's important to periodically review and adjust the asset class distribution to ensure it aligns with changing financial goals and risk tolerance, especially as market conditions evolve over time.

Sectors Info

  • Technology
    24%
  • Industrials
    13%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Health Care
    6%
  • Basic Materials
    5%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Energy
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation in this portfolio is diversified, with significant exposure to technology, industrials, and financial services. This broad sector exposure helps mitigate risks associated with sector-specific downturns. Technology, being the largest sector, indicates a growth-oriented approach, while other sectors provide balance and stability. Maintaining a diversified sector allocation can reduce the impact of poor performance in any single sector. It's advisable to periodically review sector weights to ensure they align with the investor's risk profile and market outlook, making adjustments as necessary to maintain diversification.

Regions Info

  • North America
    65%
  • Europe Developed
    9%
  • Asia Emerging
    5%
  • Asia Developed
    4%
  • Japan
    4%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with additional exposure to Europe, Asia, and other regions. This geographic diversification helps mitigate risks associated with economic downturns in any single region. While North America is a dominant component, the inclusion of international markets provides opportunities for growth in emerging markets and developed economies alike. To maintain a balanced geographic allocation, it's important to monitor regional exposures and make adjustments as needed, ensuring alignment with long-term investment goals and risk tolerance.

Redundant positions Info

  • Vanguard Total International Stock Index Fund ETF Shares
    Avantis® International Small Cap Value ETF
    High correlation
  • Invesco NASDAQ 100 ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio exhibits some asset correlation, particularly between the Vanguard Total International Stock Index Fund ETF and the Avantis® International Small Cap Value ETF, as well as between the Invesco NASDAQ 100 ETF and the Vanguard S&P 500 ETF. This correlation implies that these assets tend to move in similar directions, which could affect diversification benefits. While some correlation is expected, it's important to be mindful of overlapping exposures. Regularly assessing asset correlations can help identify opportunities to enhance diversification and optimize portfolio performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total World Bond ETF 4.20%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 3.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Invesco S&P MidCap Quality ETF 4.80%
  • Weighted yield (per year) 2.46%

The portfolio yields an average dividend of 2.46%, with contributions from various ETFs. The Vanguard Total World Bond ETF and Invesco S&P MidCap Quality ETF offer higher yields, providing a steady income stream. Dividends can be a reliable source of passive income, especially during periods of market volatility. Reinvesting dividends can enhance compounding returns over time. It's important to monitor dividend yields and adjust holdings to maintain a balance between income generation and growth potential, ensuring alignment with financial goals and risk tolerance.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total World Bond ETF 0.05%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 0.58%
  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is relatively low and indicates cost efficiency. Lower costs can significantly impact long-term returns, as they reduce the drag on performance. The majority of the ETFs in the portfolio have competitive expense ratios, contributing to the overall cost-effectiveness. It's crucial to keep an eye on investment costs and consider low-cost alternatives if necessary. Regularly reviewing and optimizing the portfolio for cost efficiency can help maximize returns, ensuring that fees do not erode the potential gains over time.

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.

The current portfolio is highly diversified and falls near the efficient frontier, a concept representing the optimal risk-return balance. However, due to some overlapping, highly correlated assets, further optimization may not be necessary. The efficient frontier suggests that the portfolio is already well-positioned to achieve its risk-return objectives. Maintaining this balance is crucial for long-term success. Regular reviews can help ensure continued alignment with financial goals and risk tolerance, adapting to changes in market conditions or personal circumstances as needed.

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