A balanced portfolio with a strong focus on U.S. equities and moderate dividend yield

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 suits an investor seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes capital appreciation through a strong focus on U.S. equities while maintaining some dividend income. Ideal for those comfortable with market fluctuations, this portfolio aims to build wealth over time with a diversified approach, though it could benefit from enhanced geographic and asset class diversification.

Positions

  • Invesco S&P 500® Quality ETF
    SPHQ - US46137V2410
    18.69%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    16.49%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    15.39%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    14.54%
  • Invesco S&P 500® High Dividend Low Volatility ETF
    SPHD - US46138E3624
    11.82%
  • Vanguard Value Index Fund ETF Shares
    VTV - US9229087443
    9.34%
  • KFA Value Line Dynamic Core Equity Index ETF
    KVLE - US5007676456
    6.87%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    6.87%

The portfolio is heavily weighted towards stocks, with over 99% in equity ETFs and a small fraction in cash. This composition aligns with a balanced risk profile, as stocks offer potential growth but also carry volatility. To align with common benchmarks, consider diversifying into bonds or other asset classes to reduce risk and increase stability. Adding fixed-income securities could provide a cushion during market downturns, enhancing the portfolio's resilience.

Growth Info

The portfolio has shown impressive historic performance with a CAGR of 14.52% and a maximum drawdown of -24.73%. This indicates strong growth potential, albeit with some volatility. Compared to benchmarks, this performance is commendable, showing the portfolio's ability to capture market gains. However, past performance doesn't guarantee future results, so it's crucial to regularly review and adjust the portfolio to maintain this growth trajectory.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a 50th percentile return of 496.05%. This suggests a high potential for future growth, with 998 out of 1,000 simulations yielding positive returns. While these projections are promising, they rely on past data and assumptions, which may not hold true in the future. Regularly revisiting these projections can help ensure alignment with changing market conditions.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio's asset allocation is concentrated in stocks, with minimal exposure to other asset classes. While this can drive growth, it may also increase risk due to lack of diversification. Compared to typical balanced portfolios, which include bonds and alternative assets, this portfolio could benefit from more diverse asset class exposure. Consider incorporating bonds or real assets to improve risk-adjusted returns and enhance overall portfolio stability.

Sectors

  • Technology
    29%
  • Health Care
    11%
  • Financials
    11%
  • Telecommunications
    10%
  • Consumer Discretionary
    9%
  • Consumer Staples
    9%
  • Industrials
    8%
  • Utilities
    4%
  • Energy
    3%
  • Real Estate
    3%
  • Basic Materials
    3%

The portfolio is notably tech-heavy, with 29.41% in technology, followed by healthcare and financial services. This concentration may lead to higher volatility, especially during interest rate changes or tech sector downturns. While sectoral allocation aligns with current market trends, it's important to ensure a balance that can withstand sector-specific risks. Diversifying into underrepresented sectors could mitigate this volatility and provide more stable returns.

Regions

  • North America
    93%
  • Europe Developed
    4%
  • Japan
    1%
  • Asia Developed
    0%
  • Australasia
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

With 93.14% exposure to North America, the portfolio is heavily skewed towards the U.S. market. This limits geographic diversification and increases vulnerability to regional economic downturns. Compared to global benchmarks, there is a notable under-exposure to emerging markets and international equities. Expanding geographic allocation could enhance diversification and capture growth opportunities in other regions, balancing the portfolio's risk profile.

Redundant positions

  • Schwab U.S. Large-Cap Growth ETF
    Invesco QQQ Trust
    High correlation
  • Invesco S&P 500® Quality ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, such as the Schwab U.S. Large-Cap Growth ETF and Invesco QQQ Trust. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this can lead to increased risk. Consider reducing overlap by replacing some correlated assets with those that have lower correlation, to improve overall risk management and enhance diversification.

Dividends

  • KFA Value Line Dynamic Core Equity Index ETF 1.60%
  • Invesco QQQ Trust 0.40%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® High Dividend Low Volatility ETF 3.10%
  • Invesco S&P 500® Quality ETF 0.80%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Value Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 1.18%

The portfolio's dividend yield is 1.18%, with the Invesco S&P 500® High Dividend Low Volatility ETF contributing significantly at 3.1%. Dividends provide a steady income stream, which can be particularly valuable during market volatility. For investors seeking regular income, focusing on high-yielding assets can be beneficial. However, balancing growth and income is crucial to ensure long-term capital appreciation alongside dividend income.

Ongoing product costs

  • KFA Value Line Dynamic Core Equity Index ETF 0.56%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® High Dividend Low Volatility ETF 0.30%
  • Invesco S&P 500® Quality ETF 0.15%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.15%

The portfolio's Total Expense Ratio (TER) is 0.15%, which is impressively low, supporting better long-term returns. Low costs mean more of your money is working for you, compounding over time. This is a positive aspect of the portfolio, aligning with best practices for cost efficiency. Regularly reviewing and comparing fund fees can help maintain this advantage, ensuring that costs remain minimized as the portfolio evolves.

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 benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio. However, before optimizing, focus on reducing correlated assets that don't enhance diversification. Adjusting the current asset allocation can improve efficiency, but remember that optimization is based on historical data and may not predict future outcomes. Regularly reassessing the portfolio can help maintain its optimal state.

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