A balanced portfolio with high U.S. equity exposure and limited geographic diversification

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 with a balanced risk tolerance, seeking growth through U.S. equities. Ideal for those with a medium to long-term horizon, it emphasizes large-cap stability while offering moderate dividend income. Investors should be comfortable with equity market volatility and consider enhancing diversification to mitigate risks and capture broader opportunities.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    20.62%
  • iShares Core S&P 500 ETF
    IVV - US4642872000
    20.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    19.99%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    19.98%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    19.40%

The portfolio consists entirely of ETFs, with a significant allocation to U.S. equity indices. Notably, 60.61% of the portfolio is concentrated in S&P 500 ETFs, indicating a strong focus on large-cap U.S. stocks. This composition provides exposure to well-established companies but may limit diversification benefits. Balancing allocations across different asset classes could enhance resilience against market fluctuations.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 14.69%. This outperforms many benchmarks, reflecting strong past market conditions. However, the maximum drawdown of -32.44% highlights potential volatility. While past performance is promising, it's crucial to remember that it doesn't guarantee future results. Monitoring market trends and adjusting allocations could help mitigate risk.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential future returns. With a median projection of 547.4% and a high probability of positive returns, the outlook is optimistic. However, the 5th percentile projection of 104.6% underscores potential downside risks. Regularly reviewing and adjusting the portfolio can help navigate these uncertainties.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is solely invested in stocks, lacking diversification across asset classes like bonds or real estate. This concentration increases exposure to equity market volatility. Diversifying into other asset classes could provide more stability and reduce risk, especially during stock market downturns. Exploring alternative investments might enhance overall portfolio resilience.

Sectors Info

  • Technology
    32%
  • Financials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Energy
    5%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

Technology dominates the sector allocation at 32%, followed by financial services and consumer cyclicals. This tech-heavy approach may lead to increased volatility during periods of interest rate hikes or tech sector downturns. Balancing sector exposure can mitigate these risks. Consider diversifying into underrepresented sectors to achieve a more balanced portfolio.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%
  • Africa/Middle East
    0%

The portfolio's geographic allocation is heavily skewed towards North America, with 99% exposure. This limits benefits from global diversification. Expanding into international markets, particularly emerging markets, can reduce reliance on U.S. economic performance and potentially capture growth opportunities abroad. A more balanced geographic distribution could enhance diversification.

Market capitalization Info

  • Large-cap
    40%
  • Mega-cap
    38%
  • Mid-cap
    19%
  • Small-cap
    3%
  • Micro-cap
    1%

With 78% of the portfolio in mega and big-cap stocks, there is a strong focus on large, established companies. While this provides stability, it may limit growth potential compared to smaller-cap stocks. Including more medium and small-cap stocks could increase growth opportunities. A balanced approach across market capitalizations can optimize risk and return.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    iShares Core S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the S&P 500 ETFs. High correlation means these assets tend to move in the same direction, reducing diversification benefits. To enhance diversification, consider reallocating to less correlated assets. This could improve risk management and portfolio efficiency, especially during market downturns.

Dividends Info

  • iShares Core S&P 500 ETF 1.30%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.59%

The portfolio's dividend yield of 1.59% is moderate, with the Schwab U.S. Dividend Equity ETF contributing significantly. Dividends can provide a steady income stream, beneficial for income-focused investors. However, the focus on growth-oriented ETFs may limit yield. Balancing growth and income needs can optimize the portfolio's total return profile.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.07%, minimizing cost drag on returns. Low costs are advantageous for long-term growth, as they enhance net returns. Maintaining low-cost investments is a positive strategy, but it's also important to consider the overall balance and diversification of the portfolio.

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 portfolio could benefit from optimization using the Efficient Frontier, which helps find the best risk-return balance. However, the current high correlation among assets limits the potential for diversification. Adjusting allocations to include less correlated assets can improve efficiency. Focus on achieving a balanced risk-return profile to maximize potential gains.

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