A moderately diversified portfolio with cautious risk and strong historical performance

Report created on Jan 18, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of a mix of ETFs and common stocks, with a significant allocation to bonds and large-cap equities. This blend reflects a cautious approach, aligning with the risk classification. Compared to a typical balanced portfolio, this one leans slightly more towards equities, which can offer growth potential. However, maintaining a healthy bond allocation helps mitigate risk. Consider whether this mix aligns with your long-term goals and risk tolerance. If you're seeking more growth, you might explore increasing equity exposure.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 12.31%. This indicates robust growth over time. However, the maximum drawdown of -22.86% highlights the potential for significant short-term losses. It's crucial to remember that past performance doesn't guarantee future results. If you're comfortable with occasional volatility, this track record suggests the portfolio is on a solid path. If not, consider strategies to reduce downside risk, like increasing bonds or diversifying further.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a 5th percentile return of 53.97% and a 67th percentile return of 538.23%. This method uses historical data to model future possibilities, but it's important to note that it can't predict exact outcomes. The high number of simulations with positive returns suggests a favorable outlook. However, diversification and risk management remain key. Regularly review your portfolio to ensure it meets your evolving financial goals.

Asset classes Info

  • Stocks
    63%
  • Bonds
    30%
  • Real Estate
    6%
  • Other
    1%

The portfolio's asset allocation is 62.89% in stocks, 29.77% in bonds, and 6% in real estate. This distribution offers a balanced approach, providing both growth and income potential. Compared to typical benchmarks, the bond allocation is relatively high, aligning with a cautious risk profile. Stocks drive growth, while bonds and real estate offer stability and income. Ensure this balance aligns with your risk tolerance and investment objectives. If seeking more stability, consider increasing bond exposure.

Sectors Info

  • Financials
    16%
  • Technology
    11%
  • Consumer Staples
    10%
  • Real Estate
    7%
  • Industrials
    6%
  • Consumer Discretionary
    6%
  • Health Care
    4%
  • Telecommunications
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    1%

Sector allocation is diversified across financial services, technology, and consumer defensive sectors, with notable exposure to financial services at 15.92%. This sectoral mix aligns closely with market benchmarks, providing a solid foundation for diversification. However, be aware that financial services can be sensitive to economic cycles, potentially increasing volatility. Regularly assess sector trends and consider adjusting allocations to capitalize on emerging opportunities or mitigate risks associated with sector-specific downturns.

Regions Info

  • North America
    60%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio is predominantly North America-focused, with 59.63% exposure, and limited diversification across other regions. While this aligns with the client's USA base, it may limit potential growth from international markets. Broadening geographic exposure can enhance diversification and reduce region-specific risks. Consider increasing allocations to developed and emerging markets outside North America to capture global growth opportunities and mitigate regional economic downturns.

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 be optimized for a better risk-return balance using the Efficient Frontier, which suggests a potential return of 2.78% at the same risk level. This concept helps identify the best possible risk-return ratio, maximizing returns for a given level of risk. While the current portfolio is already cautious, consider rebalancing to achieve this optimal mix. Regularly reassess your portfolio to ensure it remains aligned with your risk tolerance and financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Bank of America Corp 2.10%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Costco Wholesale Corp 0.50%
  • iShares U.S. Treasury Bond ETF 3.20%
  • iShares MBS ETF 3.30%
  • Schwab International Equity ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. REIT ETF 3.20%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Consumer Staples Select Sector SPDR® Fund 2.00%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 1.92%

The portfolio's dividend yield is 1.92%, with significant contributions from bond ETFs and select equities. Dividends provide a steady income stream, supporting overall returns, especially in volatile markets. For cautious investors, this income focus aligns with a desire for stability. If income is a primary goal, consider increasing dividend-paying assets. Alternatively, reinvesting dividends can enhance compounding growth over time, boosting long-term portfolio performance.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR Gold MiniShares 0.10%
  • iShares U.S. Treasury Bond ETF 0.05%
  • iShares MBS ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. REIT ETF 0.07%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.08%

The portfolio's Total Expense Ratio (TER) is 0.08%, which is impressively low, supporting better long-term performance. Low costs mean more of your returns stay in your pocket, compounding over time. This aligns well with best practices for cost-efficient investing. Regularly review your portfolio to ensure costs remain competitive. If higher-cost assets are identified, explore lower-cost alternatives to maintain cost efficiency and maximize returns.

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