A balanced portfolio with strong diversification and moderate risk exposure

Report created on Dec 21, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of ETFs, with a significant allocation to U.S. stocks (45%) and international stocks (22%). This allocation aligns with a balanced investment strategy, offering exposure to both domestic and global markets. The inclusion of commodities, real estate, and currency strategies further enhances diversification. Compared to common benchmarks, this portfolio is well-diversified across asset types, reducing risk while maintaining growth potential. The diversified nature of this portfolio supports steady performance and can help mitigate the impact of market volatility.

Growth Info

Historically, the portfolio has delivered a solid CAGR of 10.29%, indicating strong growth over time. However, it experienced a maximum drawdown of -28.94%, reflecting significant volatility during downturns. This performance surpasses typical balanced portfolio benchmarks, demonstrating effective asset allocation. While past performance is no guarantee of future results, the portfolio's historical resilience suggests it is well-positioned to navigate market fluctuations and capitalize on growth opportunities.

Projection Info

Forward projections using Monte Carlo simulations estimate an annualized return of 7.12%, with 910 out of 1,000 simulations showing positive returns. This analysis uses historical data to model potential future outcomes, highlighting both the potential for substantial growth and the risk of negative returns. The simulation's median outcome suggests the portfolio could more than double in value, though it's important to note that these projections are not guarantees. Investors should consider these estimates as one of many tools in their decision-making process.

Asset classes Info

  • Stocks
    66%
  • Bonds
    13%
  • Cash
    11%
  • Real Estate
    10%

The portfolio's allocation across asset classes includes 66.46% in stocks, 12.98% in bonds, 10.52% in cash, and 10% in real estate. This distribution aligns well with a balanced strategy, offering growth potential through equities while providing stability via bonds and cash. Compared to typical balanced benchmarks, the asset class weights are well-aligned, promoting diversification and risk management. This composition supports a blend of income and growth, catering to investors seeking a moderate risk-reward profile.

Sectors Info

  • Technology
    17%
  • Real Estate
    12%
  • Financials
    11%
  • Industrials
    7%
  • Health Care
    7%
  • Consumer Discretionary
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%

Sector allocation reveals a notable concentration in technology (16.74%) and real estate (11.98%), with financial services (10.66%) also well-represented. This mirrors common sector weightings in benchmark indices, suggesting a balanced exposure. While tech-heavy portfolios may face volatility during interest rate hikes, the diversification across other sectors like healthcare and industrials helps mitigate risks. Maintaining this balance ensures the portfolio can capture sector-specific growth while avoiding overexposure to any single industry.

Regions Info

  • North America
    57%
  • Europe Developed
    9%
  • Asia Emerging
    4%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is predominantly in North America (56.55%), with smaller allocations to Europe and Asia. This aligns with common benchmarks, ensuring global diversification while maintaining a focus on the U.S. market. The limited exposure to emerging markets could be a consideration for those seeking higher growth potential, though it also reduces risk. This geographic diversification helps manage currency risk and provides opportunities to benefit from different regional economic cycles.

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 seeks the best risk-return balance based on current assets. This optimization focuses on improving the risk-reward ratio without necessarily altering diversification. By adjusting allocations among existing assets, the portfolio can achieve a more efficient balance, enhancing returns for a given level of risk. This approach supports strategic adjustments to maintain alignment with investment goals and market conditions.

Dividends Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 4.60%
  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 6.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 2.05%

With a total dividend yield of 2.05%, the portfolio provides a modest income stream, supporting investors seeking regular cash flow. The yield is primarily driven by bond and commodity holdings, offering stability alongside growth-focused equities. This balance of income and growth aligns with the portfolio's balanced strategy, catering to investors who value steady returns. While dividends enhance total returns, they should be considered alongside capital appreciation when evaluating overall portfolio performance.

Ongoing product costs Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 0.04%
  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • The Real Estate Select Sector SPDR Fund 0.09%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is impressively low at 0.16%, benefiting long-term returns. Low costs are crucial in maximizing net gains, as fees can erode returns over time. This cost efficiency aligns with best practices in portfolio management, ensuring more of the portfolio's returns are retained by the investor. By maintaining low fees, the portfolio supports better compounding of returns, enhancing its growth potential and aligning with a cost-conscious investment strategy.

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