A high-dividend homage or a one-trick pony with an overreliance on yield
Report created on Jun 5, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VY Vanguard High Dividend Yield Index Fund ETF Shares
VYM - US9219464065 83.77% -
IV Invesco Mortgage Capital Inc
IVR - US46131B1008 16.23%
At first glance, this portfolio screams "I love dividends more than diversification!" With a staggering 83.77% parked in the Vanguard High Dividend Yield Index Fund ETF Shares and the rest in Invesco Mortgage Capital Inc, it's like putting almost all your eggs in one basket and then casually tossing the rest into a basket that's already tipping over. Diversification isn't just a fancy term; it's the investment equivalent of not putting all your weight on one foot while standing on thin ice.
Growth
Historically, this portfolio has grown at a CAGR of 8.92%, which isn't too shabby until you see the -41.72% max drawdown. That's like enjoying a leisurely hike up the mountain and then suddenly free-falling off a cliff. Sure, those 17 days of significant returns sound exciting, but they're the financial equivalent of finding a $20 bill in the street - great when it happens, but not something to base your retirement plan on.
Projection
The Monte Carlo simulation results for this portfolio should come with a warning label. With a 5th percentile outcome of -95.8%, it's like saying there's a not-so-small chance your investment could nearly vanish. Sure, there's a median projection of -47.4%, but gambling on a coin flip that might halve your money doesn't scream "wise investment strategy." And with only 348 out of 1,000 simulations ending up positive, it's less "calculated risk" and more "crossing fingers and hoping."
Asset classes
- Stocks 100%
Investing 100% in stocks and calling it a day is like deciding to eat only steak for every meal. Sure, it's delicious and can be nutritious, but where are the vegetables, grains, and fruits? A balanced diet, much like a balanced portfolio, includes a variety of asset classes. Stocks for growth, bonds for stability, perhaps some real estate or commodities for diversification - not just a single food group.
Sectors
- Financials 17%
- Real Estate 16%
- Health Care 12%
- Technology 11%
- Consumer Staples 11%
- Industrials 9%
- Energy 7%
- Consumer Discretionary 6%
- Utilities 5%
- Telecommunications 3%
- Basic Materials 2%
The sector allocation is like someone trying to make a balanced meal out of different types of carbs. Sure, you've got your financial services, real estate, healthcare, and a smidge of technology, but it's heavily skewed towards high-dividend sectors. This approach can lead to indigestion when the market's appetite changes. Diversification across sectors means spreading your bets to include a wider variety of industries, not just loading up on the ones that currently pay well.
Regions
- North America 99%
- Europe Developed 1%
With 99% of assets in North America, this portfolio is the investment equivalent of refusing to eat any food that's not from your hometown diner. The world is a big place with a lot of opportunities. Ignoring developed markets in Europe and emerging markets in Asia and Latin America is like saying no to a world of flavors. Expanding your geographic exposure can offer growth opportunities and risk mitigation.
Market capitalization
- Large-cap 39%
- Small-cap 21%
- Mid-cap 21%
- Mega-cap 18%
- Micro-cap 1%
The market capitalization mix is like deciding to hang out with friends of only certain heights. Big, small, medium, mega, and a lonely 1% micro - it sounds like a diversified crowd until you realize you're mostly hanging with the big guys. This strategy can miss out on the nimble moves of smaller companies or the stability offered by the largest ones. A more balanced approach might not be as exciting but could lead to a steadier experience.
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 current setup compared to the optimal portfolio is like choosing to ride a tricycle on the highway. Sure, you might eventually get where you're going, but there's a faster, more efficient way to travel. With an optimal portfolio offering a potential expected return of 10.97% at the same risk level, it's time to trade in for something with a bit more horsepower and safety features.
Dividends
- Invesco Mortgage Capital Inc 20.60%
- Vanguard High Dividend Yield Index Fund ETF Shares 2.80%
- Weighted yield (per year) 5.69%
Leaning heavily on dividends, especially from a single ETF and a high-yield stock, is like counting on your rich uncle's birthday checks as your main source of income. It's nice when it comes, but what if it stops or shrinks? Diversification beyond high-dividend payers can provide income stability and growth potential, ensuring you're not overly reliant on the generosity of a few.
Ongoing product costs
- Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
- Weighted costs total (per year) 0.05%
The one commendable aspect of this portfolio is its low cost, with a total expense ratio of 0.05%. It's like finding a no-cover-charge nightclub that doesn't water down its drinks - a rare find in the investment world. Keeping costs low is crucial for long-term growth, so at least in this aspect, the portfolio doesn't shoot itself in the foot.
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