Balanced and Broadly Diversified Portfolio with Strong Historical Performance and Moderate Risk for US-Based Investors

Report created on Aug 11, 2024

Risk profile Info

4/7
Balanced
← Less risk More risk →

Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

The portfolio is composed of five ETFs, each contributing 20% to the total allocation. It is broadly diversified across various sectors and geographies, with a strong focus on the US market. This composition offers a balanced approach, aiming to capture growth from different segments while maintaining a moderate risk profile. Such diversification is crucial as it helps spread risk and potentially stabilize returns. To enhance the portfolio, consider maintaining this balanced allocation, ensuring it aligns with your long-term investment goals and risk tolerance.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.45%. A hypothetical initial investment would have experienced significant growth over time, despite a maximum drawdown of -23.49%. This performance indicates resilience and potential for recovery after market downturns. Understanding past performance helps gauge future expectations, although it's not a guarantee. To maintain strong performance, continue monitoring market conditions and ensure the portfolio remains aligned with your risk appetite and financial objectives.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future potential. A hypothetical initial investment could result in end values ranging from 124.13% at the 5th percentile to 947.01% at the 67th percentile. With 999 out of 1,000 simulations yielding positive returns, the annualized return stands at 16.83%. This simulation provides a range of possible outcomes, emphasizing the importance of understanding risk and variability. To capitalize on this potential, maintain a diversified approach and be prepared for market fluctuations.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, accounting for 99.6% of the allocation, with minimal exposure to cash and other asset classes. This stock-heavy allocation aligns with a growth-oriented strategy but may increase vulnerability to market volatility. Understanding asset class distribution is vital, as it influences risk and return dynamics. To manage risk, consider periodically reviewing the allocation to ensure it aligns with your financial goals and risk tolerance, potentially incorporating more diverse asset classes if needed.

Sectors Info

  • Technology
    22%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Industrials
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    7%
  • Consumer Staples
    7%
  • Basic Materials
    4%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio spans various sectors, with significant exposure to technology, financial services, and consumer cyclicals. This sector allocation reflects a balanced approach, capturing growth from different economic segments. Sector diversification is essential as it helps mitigate risks associated with downturns in specific industries. To optimize sector exposure, regularly review and adjust allocations based on market conditions and your investment strategy, ensuring it remains diversified and aligned with your risk tolerance.

Regions Info

  • North America
    80%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America, with some exposure to Europe and Asia. This geographic composition reflects a focus on US markets, which can offer stability and growth potential. Geographic diversification is crucial as it helps reduce risks associated with economic downturns in specific regions. To enhance geographic diversification, consider monitoring global economic trends and adjusting allocations as needed, ensuring the portfolio remains balanced and aligned with your investment goals.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund ETF Shares and Invesco NASDAQ 100 ETF. High correlation means these assets tend to move in the same direction, which can increase portfolio risk during market downturns. Understanding asset correlations is important for managing risk and optimizing diversification. To address this, consider periodically reviewing asset correlations and adjusting allocations to reduce overlap and enhance diversification.

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.

Portfolio optimization is not recommended due to overlapping, highly correlated assets. Instead, focus on maintaining current diversification and alignment with your financial goals. By moving along the efficient frontier, you can adjust the portfolio to be riskier or more conservative, depending on your risk tolerance. Prioritize understanding asset correlations and reviewing sector and geographic allocations to ensure the portfolio remains balanced and aligned with your investment strategy.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.96%

The portfolio offers a moderate dividend yield of 1.96%, with contributions from all ETFs. Dividend income can provide a steady cash flow, which is beneficial for reinvesting or supplementing other income sources. Understanding dividend yield is essential as it impacts total returns and cash flow management. To optimize dividend income, consider monitoring changes in dividend policies and adjusting allocations to ensure the portfolio aligns with your income needs and investment strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, reflecting a cost-efficient approach. Keeping investment costs low is essential as it directly impacts net returns over time. Understanding portfolio costs is crucial for maximizing returns and maintaining efficiency. To ensure cost-effectiveness, periodically review expense ratios and consider low-cost alternatives if necessary, ensuring the portfolio remains aligned with your financial goals and cost management strategy.

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