A balanced portfolio with a strong tech focus and significant Taiwan exposure

Report created on Feb 20, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio primarily consists of ETFs, with a significant focus on equities (80%) and a smaller allocation to cash (20%). This composition suggests a balanced approach, aiming for growth while maintaining liquidity. Compared to typical balanced portfolios, which might have a higher bond allocation, this portfolio leans more towards equities, potentially increasing risk but offering higher growth opportunities. To align more closely with benchmark compositions, consider diversifying further into bonds or other fixed-income assets to reduce volatility.

Growth Info

Historically, the portfolio has shown a robust CAGR of 12.29%, which is commendable for a balanced profile. However, the max drawdown of -28.95% indicates significant volatility during downturns. Compared to benchmarks, this performance suggests strong growth potential but also highlights the need for risk management. For a balanced portfolio, consider strategies to mitigate drawdowns, such as increasing asset class diversification or incorporating defensive sectors to cushion against market dips.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, show a wide range of potential returns. The median projection suggests a substantial growth of 363.3%, with a high probability of positive returns. However, these simulations are based on past data, and future market conditions can vary. To enhance reliability, consider regularly updating these projections with current market data and adjusting the portfolio to reflect changing economic conditions and forecasts.

Asset classes Info

  • Stocks
    80%
  • Cash
    20%

The portfolio's asset class allocation is heavily weighted towards stocks (80%), with a smaller cash component (20%). This allocation aligns with a balanced risk profile, emphasizing growth potential while maintaining liquidity. Compared to typical balanced benchmarks, which might include more bonds, the portfolio could benefit from adding fixed-income assets to reduce risk and enhance stability. Diversifying into bonds or alternative assets could provide a buffer during equity market downturns.

Sectors Info

  • Technology
    43%
  • Financials
    10%
  • Consumer Discretionary
    6%
  • Telecommunications
    6%
  • Industrials
    5%
  • Health Care
    3%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Energy
    1%

The portfolio is notably tech-heavy, with 43% allocated to technology, which may lead to higher volatility, especially during interest rate hikes. Other sectors like financial services and consumer cyclicals offer some diversification but are relatively smaller. Compared to benchmarks, this sector concentration might expose the portfolio to sector-specific risks. Consider rebalancing by increasing exposure to underrepresented sectors like healthcare or utilities to enhance stability and reduce sector-specific risks.

Regions Info

  • North America
    40%
  • Asia Developed
    40%

Geographic exposure is concentrated in North America and Asia Developed, each comprising 40% of the portfolio. This allocation provides a good mix of developed market exposure but lacks diversity in Europe and emerging markets. Compared to global benchmarks, this could limit growth opportunities and increase vulnerability to regional risks. Enhancing geographic diversification by including regions like Europe or emerging markets could provide additional growth potential and reduce regional risk exposure.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    33%
  • Mid-cap
    8%

The portfolio is predominantly composed of mega and big-cap stocks, accounting for 72% of the allocation. This focus on larger companies typically offers stability and lower volatility but may limit exposure to the growth potential of smaller firms. Compared to benchmarks, this allocation might lack the dynamism of small and mid-cap stocks. Consider incorporating medium and small-cap stocks to capture growth opportunities and enhance diversification across different company sizes.

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 could be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio based on current assets. This process involves adjusting the allocation to achieve a balance that maximizes returns for a given level of risk. While this optimization doesn't guarantee diversification, it provides a framework for enhancing risk-adjusted returns. Regularly reassessing asset allocations can ensure the portfolio remains aligned with changing market conditions and investor goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • iShares® 0-3 Month Treasury Bond ETF 5.00%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.36%

The portfolio's dividend yield stands at 1.36%, with contributions from the Invesco NASDAQ 100 ETF, iShares Treasury Bond ETF, and Vanguard S&P 500 ETF. While dividends provide a steady income stream, the yield is relatively low compared to income-focused portfolios. For investors seeking higher income, consider increasing allocations to high-dividend sectors or ETFs. However, balance this with growth objectives to maintain the portfolio's overall risk-return profile.

Ongoing product costs Info

  • iShares MSCI Taiwan ETF 0.59%
  • Invesco NASDAQ 100 ETF 0.15%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.29%

The portfolio's total expense ratio (TER) is 0.29%, which is relatively low and supports better long-term returns by minimizing costs. This efficient cost structure is commendable and aligns with best practices for maintaining a cost-effective portfolio. To further optimize, regularly review and compare ETF fees to ensure they remain competitive. Consider reallocating to lower-cost alternatives if available, without compromising the portfolio's strategic objectives and diversification.

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