A balanced portfolio with strong S&P 500 focus and limited international exposure

Report created on Dec 13, 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 comprises four key ETFs, with a significant 50% allocation to the SPDR® Portfolio S&P 500 ETF, followed by 20% in Schwab U.S. Large-Cap Growth ETF. The SPDR® Portfolio S&P 500 Value ETF and Vanguard Total International Stock Index Fund ETF Shares each make up 15%. This composition indicates a strong focus on U.S. equities, particularly large-cap stocks, with a moderate allocation to international markets. Understanding the asset composition is crucial as it reflects the portfolio's focus on stability and growth, primarily in the U.S. market. To enhance diversification, consider increasing exposure to other asset classes like bonds or commodities.

Growth Info

Historically, the portfolio has performed well, boasting a compound annual growth rate (CAGR) of 13.8%. However, it has also experienced a maximum drawdown of -33.84%, indicating periods of significant loss. While past performance can offer insights, it does not guarantee future results due to market volatility and changing economic conditions. This performance suggests that while the portfolio has potential for high returns, it also carries substantial risk. To mitigate potential losses, consider strategies like rebalancing or introducing more defensive assets to the mix.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, estimates a median portfolio growth of 403.2% with a 67th percentile growth of 582.26%. These projections highlight the potential for substantial returns, but also acknowledge the inherent uncertainty in future market conditions. While simulations provide a range of possible outcomes, they are based on historical trends and may not account for unprecedented events. To prepare for varying scenarios, regularly review and adjust the portfolio to align with changing market dynamics and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted toward stocks, with nearly 100% allocation, which can lead to high volatility. This concentration in equities suggests potential for significant growth, but also exposes the portfolio to market fluctuations. Diversifying across different asset classes like bonds, real estate, or commodities can help balance risk and improve stability. Consider gradually introducing alternative asset classes to create a more resilient portfolio that can withstand market downturns.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation is diversified, with a notable emphasis on technology at 29.64%, followed by financial services and healthcare. This sectoral distribution reflects a focus on growth-oriented industries, which can drive strong returns but may also introduce volatility. Balancing sectoral exposure can help mitigate risks associated with sector-specific downturns. Consider adjusting allocations to include more defensive sectors like utilities or consumer staples to provide stability during economic slowdowns.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for 85.69% of the allocation. This focus on the U.S. market can limit exposure to global growth opportunities and increase vulnerability to domestic economic shifts. Diversifying geographically can help capture growth in emerging markets and reduce regional risks. Consider increasing exposure to international markets, especially in regions with strong growth potential, to enhance diversification and capture a broader range of opportunities.

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 potentially be optimized using the Efficient Frontier, which focuses on achieving the best possible risk-return ratio through asset allocation adjustments. This process involves analyzing the current assets and reallocating them to maximize returns for a given level of risk. Optimization can enhance portfolio efficiency, but it requires careful consideration of risk tolerance and investment goals. Regularly reassess the portfolio's alignment with the Efficient Frontier to ensure that it remains optimized for changing market conditions and personal objectives.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • SPDR® Portfolio S&P 500 Value ETF 2.00%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.41%

The portfolio's dividend yield stands at 1.41%, with contributions from all ETFs, particularly the Vanguard Total International Stock Index Fund ETF Shares at 3.0%. Dividends provide a steady income stream and can enhance total returns, especially during periods of market volatility. However, a focus on growth stocks may limit dividend income. To increase dividend yield, consider reallocating some assets to higher-yielding investments, such as dividend-focused ETFs or dividend-paying stocks.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • SPDR® Portfolio S&P 500 Value ETF 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is relatively low at 0.04%, with individual ETFs ranging from 0.02% to 0.08%. Lower costs can significantly enhance long-term returns by reducing the drag on performance. Maintaining a low-cost structure is crucial for maximizing investment gains over time. Regularly review the expense ratios of current holdings and explore opportunities to switch to lower-cost alternatives if available, ensuring that cost efficiency remains a priority in portfolio management.

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