A balanced portfolio focused on US equities with moderate risk and low diversification

Report created on Dec 17, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is composed entirely of the Vanguard S&P 500 ETF, which is an exchange-traded fund tracking the performance of the S&P 500 index. This means the portfolio is heavily weighted towards large-cap U.S. stocks, providing exposure to a broad range of industries. While this can offer potential for growth, it also means there is limited diversification in terms of asset classes and geographic regions. For investors seeking a more balanced approach, incorporating other asset types like bonds or international equities could help spread risk.

Growth Info

Historically, this portfolio has performed well, with a compound annual growth rate (CAGR) of 14.08%. This indicates strong returns over time, benefiting from the S&P 500's robust performance. However, it's important to note the maximum drawdown of -33.98%, which highlights the potential for significant value loss during market downturns. Investors should be aware that past performance is not always indicative of future results, especially in changing economic conditions. Regularly reviewing market trends and adjusting allocations can help manage risk.

Projection Info

Using Monte Carlo simulations, the portfolio's potential future performance was analyzed. This method uses historical data to simulate a wide range of possible outcomes, providing a probabilistic view of future returns. The results show a median expected return of 514.32%, with a 5th percentile outcome of 106.26% and a 67th percentile of 697.94%. While these projections offer insights, they are not guarantees and should be considered alongside other factors like market conditions and personal risk tolerance when making investment decisions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for nearly 100% of its composition, with a negligible amount in cash. This concentration in equities can lead to higher growth potential, but also increases exposure to market volatility. Diversifying into other asset classes such as bonds or real estate could help mitigate risk and provide more stable returns over time. A balanced allocation can enhance the portfolio's resilience to economic fluctuations and improve overall performance.

Sectors Info

  • Technology
    33%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

The sectoral allocation of this portfolio shows a significant concentration in technology, which makes up over 33% of the holdings. While this sector has been a strong performer, reliance on a single sector can increase risk if market conditions change unfavorably. Other sectors like financial services, healthcare, and consumer cyclicals provide some diversification, but the portfolio would benefit from a more balanced distribution across various industries to reduce sector-specific risks.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, specifically the United States, with minimal exposure to other regions. This lack of international diversification can limit opportunities and increase vulnerability to domestic economic downturns. Expanding geographic exposure to include developed and emerging markets could improve diversification and potentially enhance returns by tapping into global growth opportunities. Investors should consider the benefits of a more geographically balanced approach.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.20%

The Vanguard S&P 500 ETF offers a dividend yield of 1.2%, which contributes to the portfolio's total return. Dividends can provide a steady income stream and help cushion against market volatility. However, the yield is relatively modest, reflecting the focus on growth rather than income. Investors seeking higher income may want to consider adding dividend-focused investments to their portfolio. Balancing growth and income can enhance overall returns and provide greater financial stability.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with an expense ratio of just 0.03% for the Vanguard S&P 500 ETF. Keeping costs low is crucial for maximizing long-term returns, as fees can significantly erode gains over time. While the current costs are minimal, investors should continue to monitor for any changes and consider the impact of fees when evaluating potential new investments. Maintaining a cost-effective strategy is an essential component of successful investing.

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