Balanced portfolio with tech focus and moderate risk offering diversification potential

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 is suited for an investor with a moderate risk tolerance seeking growth through a tech-focused approach. The investment horizon is likely medium to long-term, as the portfolio's heavy equity exposure may lead to short-term volatility. This investor is comfortable with market fluctuations and aims to capitalize on the growth potential of technology and other high-performing sectors. The inclusion of Bitcoin and gold suggests an interest in alternative assets for diversification.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    60.00%
  • iShares Bitcoin Trust
    IBIT
    15.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    15.00%
  • SPDR® Gold Shares
    GLD - US78463V1070
    10.00%

This portfolio consists of four main ETFs, with the Vanguard S&P 500 ETF making up 60% of the total investment. The remaining 40% is divided among the iShares Bitcoin Trust (15%), Vanguard Information Technology Index Fund ETF Shares (15%), and SPDR® Gold Shares (10%). Compared to a typical balanced portfolio, this one is heavily weighted towards equities and technology, which may increase volatility but also potential returns. To better align with a balanced benchmark, consider introducing bonds or other asset classes to reduce risk.

Warning The historical data covers less than 2 years, which reduces the confidence in the calculated values.

Growth Info

The portfolio has demonstrated a strong historical performance, with a Compound Annual Growth Rate (CAGR) of 27.65%. This impressive growth rate indicates effective asset selection. However, the max drawdown of -10.44% suggests vulnerability during market downturns. While past performance is promising, it's important to remember that it doesn't guarantee future success. To mitigate potential losses, consider diversifying further across asset classes or sectors that are less correlated with equities.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The 5th percentile projects a 1,040.7% return, while the 67th percentile suggests 12,568.8%. Although all simulations resulted in positive returns, it's crucial to understand that these projections are based on past data and may not reflect future market conditions. To prepare for various scenarios, maintaining a diversified and flexible portfolio is advisable.

Asset classes Info

  • Stocks
    75%
  • Other
    25%
  • Cash
    0%

The portfolio's asset allocation is predominantly in stocks (75%), with the remaining 25% in other assets, such as gold and Bitcoin. This allocation offers growth potential but also introduces increased risk. Compared to a balanced portfolio benchmark, which typically includes bonds, this portfolio is more aggressive. To enhance diversification and reduce volatility, consider adding fixed-income assets or other non-correlated investments, which can provide stability during market fluctuations.

Sectors Info

  • Technology
    35%
  • Financials
    8%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Telecommunications
    6%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in the technology sector, which accounts for 35% of the total investment. While this sector has delivered strong returns, it also comes with higher volatility, especially during periods of interest rate changes. Other sectors, such as financial services and consumer cyclicals, have smaller allocations, providing some diversification. To mitigate sector-specific risks, consider balancing the technology exposure with investments in more stable sectors like utilities or healthcare.

Regions Info

  • North America
    75%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is largely concentrated in North America, representing 75% of the allocation. This focus may limit exposure to growth opportunities in other regions, such as Europe or Asia. While North American markets have performed well historically, diversifying geographically could reduce risk and capture potential gains from emerging markets. Consider reallocating a portion of the portfolio to include international equities or funds with global reach to enhance diversification.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    25%
  • Mid-cap
    13%
  • Unknown
    10%
  • Small-cap
    2%
  • Micro-cap
    0%

The portfolio's market capitalization distribution is skewed towards mega-cap stocks, which make up 36% of the allocation. Large-cap stocks are typically more stable but may offer lower growth potential compared to small- or mid-cap stocks. The limited exposure to smaller market caps (2% small, 0% micro) suggests a conservative approach to growth. To potentially increase returns, consider incorporating more mid- and small-cap stocks, which can provide higher growth opportunities.

Dividends Info

  • Vanguard Information Technology Index Fund ETF Shares 0.70%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.88%

The portfolio's dividend yield is 0.88%, with contributions from the Vanguard S&P 500 ETF and the Vanguard Information Technology Index Fund ETF Shares. While dividends are a reliable source of income, the yield is relatively low compared to income-focused portfolios. For investors seeking regular income, consider increasing exposure to high-dividend stocks or dividend-focused funds. This can enhance cash flow and provide a cushion during market downturns.

Ongoing product costs Info

  • SPDR® Gold Shares 0.40%
  • iShares Bitcoin Trust 0.12%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is a low 0.09%, indicating cost efficiency. Lower costs mean more of your investment returns are retained, which can significantly enhance long-term performance. The SPDR® Gold Shares has the highest individual cost at 0.40%, but the overall cost is still competitive. If cost reduction is a priority, consider reviewing the expense ratios of alternative funds or ETFs that offer similar exposure at a lower cost.

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 potentially be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. By adjusting the asset allocation, it's possible to enhance returns without taking on additional risk. This involves reallocating current assets to achieve a more efficient balance. However, it's essential to align this optimization with your personal risk tolerance and investment goals, as efficiency doesn't necessarily equate to diversification or other objectives.

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