A balanced portfolio with strong US focus and tech-heavy sector allocation

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is primarily composed of ETFs, with a significant 50% allocation to the Vanguard S&P 500 ETF. The remaining allocations are spread across the Invesco NASDAQ 100 ETF, Vanguard Total International Stock Index Fund ETF Shares, Avantis U.S. Small Cap Value ETF, and Vanguard Information Technology Index Fund ETF Shares. This structure indicates a focus on large-cap U.S. equities and technology, with some international and small-cap exposure. Understanding this composition is crucial as it highlights the portfolio's reliance on U.S. market performance and tech sector trends. To enhance diversification, consider reducing the concentration in U.S. large caps and technology, possibly by increasing international or other sector exposures.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 16.13%, with a maximum drawdown of -25.94%. This performance suggests robust growth potential but also highlights significant volatility. Analyzing historical performance helps investors gauge how the portfolio might react in different market conditions. However, past performance is not indicative of future results, and market dynamics can change. To potentially mitigate future drawdowns, consider diversifying into less volatile asset classes or sectors that could provide stability during market downturns.

Projection Info

The forward projection using Monte Carlo simulation suggests a wide range of potential outcomes, with the 50th percentile showing a 725.59% return. Monte Carlo simulations use historical data to project future performance by running numerous scenarios to assess risk and return variability. While this provides insights into potential outcomes, it's essential to remember that these projections are based on past data and assumptions that may not hold true in the future. To better align with your risk tolerance, consider adjusting the asset allocation to manage potential volatility.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, comprising over 99% of the total allocation. This concentration in equities indicates a higher risk profile, as stocks can be volatile but offer growth potential. Diversifying across different asset classes, such as bonds or commodities, can help reduce risk and provide more balanced returns. Consider introducing fixed income or alternative investments to create a more stable portfolio that can weather various market conditions.

Sectors Info

  • Technology
    37%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Health Care
    8%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sectoral allocation is dominated by technology, which accounts for over 36% of the portfolio. This heavy tech weighting can lead to increased volatility due to the sector's cyclical nature. Sector allocation is crucial for managing risk and capturing growth opportunities. To reduce sector-specific risk, consider diversifying into underrepresented sectors like healthcare or utilities, which can provide stability and resilience during economic downturns.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographic exposure is predominantly in North America, with 85% of the portfolio allocated to this region. This concentration exposes the portfolio to regional economic and political risks. Geographic diversification is vital for spreading risk and capturing growth from different parts of the world. To achieve better geographic balance, consider increasing allocations to emerging markets or other regions, which can offer diversification benefits and potential growth opportunities.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard Information Technology Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly between the Invesco NASDAQ 100 ETF and the Vanguard Information Technology Index Fund ETF Shares. High correlation means these assets tend to move in tandem, reducing diversification benefits. Asset correlation analysis helps in understanding how different investments interact and affect overall portfolio risk. To improve diversification, consider replacing one of the correlated assets with an investment that has a lower correlation to existing holdings.

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 can be optimized using the Efficient Frontier to achieve a better risk-return balance. This optimization involves adjusting current asset allocations to find the best possible risk-return ratio. The Efficient Frontier is a concept in modern portfolio theory that represents the set of optimal portfolios offering the highest expected return for a defined level of risk. To optimize, focus on reducing overlaps, such as highly correlated assets, and reallocating to achieve a more efficient portfolio structure.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.34%

The portfolio's overall dividend yield is 1.34%, with significant contributions from the Vanguard Total International Stock Index Fund ETF Shares at 2.9%. Dividends provide a steady income stream and can contribute to total returns, especially in volatile markets. Evaluating dividend yields is important for income-focused investors. If income is a priority, consider reallocating towards higher-yielding assets or funds that focus on dividend growth and stability.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The total expense ratio for the portfolio is 0.08%, with the highest cost coming from the Avantis U.S. Small Cap Value ETF at 0.25%. Lowering costs can significantly impact long-term returns, as fees compound over time. Understanding portfolio costs is crucial for optimizing net returns. To minimize expenses, consider replacing higher-cost funds with similar lower-cost options or increasing allocations to the already low-cost Vanguard ETFs.

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