A balanced portfolio with a focus on dividend yield and moderate geographic diversification

Report created on Feb 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is comprised of five ETFs, with a notable emphasis on dividend-focused funds. A large portion, 60%, is allocated to dividend equity ETFs, while the remaining 40% is diversified across real estate, S&P 500, and international stocks. This structure reflects a balanced approach, aligning with a moderate risk profile. Compared to a typical benchmark, the portfolio leans towards dividend yield, which can be beneficial for income generation. To enhance diversification, consider incorporating a broader range of asset classes or increasing international exposure.

Growth Info

Historically, the portfolio has achieved a strong compound annual growth rate (CAGR) of 11.45%, outperforming many traditional benchmarks. However, it experienced a significant maximum drawdown of -34.52%, indicating vulnerability during market downturns. This performance suggests that while the portfolio has delivered impressive growth, it may be susceptible to volatility. Investors should weigh the benefits of past returns against the potential for future fluctuations, possibly diversifying further to mitigate drawdown risk.

Projection Info

Using Monte Carlo simulations, the portfolio's potential future performance was analyzed. These simulations, which use historical data to predict outcomes, indicate an annualized return of 10.65%. While 968 out of 1,000 simulations resulted in positive returns, it's important to remember that simulations rely on past data and cannot predict future market conditions with certainty. Investors should use these projections as a guide, not a guarantee, and consider re-evaluating their risk tolerance and goals in light of these insights.

Asset classes Info

  • Stocks
    90%
  • Real Estate
    10%

The portfolio is heavily weighted towards stocks, with a 90% allocation, complemented by a 10% allocation to real estate. This allocation aligns with a balanced risk profile, offering potential for growth while maintaining some stability through real estate exposure. Compared to typical benchmarks, the absence of bonds or other fixed-income securities may increase volatility. To further diversify, consider integrating additional asset classes, such as bonds, which could provide a buffer during market fluctuations.

Sectors Info

  • Technology
    17%
  • Financials
    16%
  • Health Care
    11%
  • Real Estate
    11%
  • Industrials
    9%
  • Consumer Staples
    9%
  • Consumer Discretionary
    9%
  • Energy
    7%
  • Telecommunications
    5%
  • Utilities
    2%
  • Basic Materials
    2%

Sector allocation reveals a diversified approach, with technology, financial services, and healthcare being the top sectors. This distribution aligns with common benchmarks, indicating a well-balanced sector exposure. However, the portfolio's concentration in technology could lead to increased volatility, particularly during periods of interest rate changes. To mitigate this risk, consider adjusting sector weights to achieve a more balanced distribution, potentially reducing reliance on any single sector.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%

The portfolio's geographic exposure is predominantly in North America, accounting for 90% of the allocation. While this aligns with many U.S.-centric benchmarks, it limits exposure to international markets, which can offer diversification benefits. By increasing allocations to Europe, Asia, or emerging markets, investors may reduce regional risk and enhance potential growth opportunities. This could be particularly beneficial if global markets outperform domestic ones in the future.

Market capitalization Info

  • Large-cap
    46%
  • Mid-cap
    26%
  • Mega-cap
    22%
  • Small-cap
    5%
  • Micro-cap
    1%

Market capitalization exposure is primarily in large-cap stocks, with big and mega caps making up 68% of the portfolio. This focus on larger companies typically offers stability and lower volatility compared to smaller-cap stocks. However, the limited exposure to small and micro-cap stocks may restrict potential growth opportunities. To diversify, consider increasing allocations to smaller-cap stocks, which can enhance growth potential and provide a broader market perspective.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Schwab U.S. Dividend Equity ETF and Vanguard High Dividend Yield Index Fund ETF Shares. High correlation means these assets tend to move together, potentially limiting diversification benefits during market downturns. To optimize risk management, consider reducing overlap by selecting assets with lower correlations, thereby enhancing diversification and reducing potential portfolio volatility.

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.

While the portfolio is well-structured, optimizing for risk versus return through the Efficient Frontier can enhance performance. This involves adjusting current asset allocations to achieve the best possible risk-return ratio. However, note that this optimization is based solely on existing assets and does not account for potential new investments. Consider rebalancing the portfolio periodically to maintain alignment with the Efficient Frontier, ensuring an optimal risk-return balance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Real Estate Index Fund ETF Shares 3.80%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 2.66%

The portfolio's dividend yield is 2.66%, providing a steady income stream. This is particularly appealing for income-focused investors. Dividend-paying stocks can offer stability during market volatility, as dividends provide returns independent of stock price movements. However, reliance on dividend income may limit growth potential. To balance income and growth, consider reassessing the dividend focus and possibly integrating growth-oriented assets to enhance long-term returns.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is an impressively low 0.06%, which is beneficial for long-term performance by minimizing costs. Low fees are crucial as they compound over time, eroding returns less than higher-cost alternatives. This cost efficiency aligns well with best practices in portfolio management. Continue to monitor and maintain low-cost investments, as even small fee increases can significantly impact cumulative returns over time.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey