A balanced portfolio with strong US focus and technology sector dominance

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 with a balanced risk tolerance, seeking growth through large-cap US equities. The focus on technology and established sectors suggests a preference for innovation and stability. The investor likely has a medium to long-term investment horizon, aiming to capitalize on market growth while managing risk through a diversified sector approach. This strategy is ideal for those comfortable with some volatility in exchange for potential higher returns, while still maintaining a focus on cost-efficiency and dividend income.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    30.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    20.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    20.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    20.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%

The portfolio is heavily weighted towards US equities, with a significant emphasis on large-cap stocks. This composition is typical for investors seeking exposure to established companies with stable growth potential. While this allocation provides a solid foundation, the lack of diversification across asset classes and regions may limit potential gains and increase vulnerability to US market fluctuations. To enhance diversification, consider integrating other asset classes like bonds or international equities, which can provide a buffer against domestic market volatility and potentially improve overall portfolio stability.

Growth Info

With a historical Compound Annual Growth Rate (CAGR) of 15.53%, the portfolio has delivered impressive returns. This performance surpasses many standard benchmarks, indicating strong past growth. However, the maximum drawdown of -27.47% highlights the risk of significant losses during market downturns. While past performance is not indicative of future results, understanding these metrics helps gauge risk and return expectations. Consider strategies to mitigate drawdown risks, such as incorporating less volatile assets or adjusting allocations during economic downturns to maintain a balanced risk-return profile.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with a 50th percentile return of 612.38%. This suggests a favorable outlook based on historical data. However, it's important to note that these projections rely on past performance, which doesn't guarantee future results. The simulations show a high likelihood of positive returns, but also highlight the inherent uncertainty in investing. To prepare for various scenarios, consider stress-testing the portfolio under different market conditions and adjusting allocations to align with your risk tolerance and investment objectives.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio's allocation is overwhelmingly concentrated in stocks, accounting for nearly 100% of the holdings. This lack of diversification across asset classes can expose the portfolio to higher volatility and risk, especially during market downturns. While equities offer growth potential, adding other asset classes like bonds or alternative investments can provide a cushion against market fluctuations. Diversifying across asset classes can help stabilize returns and reduce the overall risk profile, making the portfolio more resilient to economic changes.

Sectors

  • Technology
    37%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    10%
  • Financials
    10%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Technology dominates the portfolio with a 36.84% allocation, reflecting a strong bias towards this sector. While tech stocks have driven substantial growth, they also carry higher volatility, especially in environments with rising interest rates or regulatory changes. Balancing sector exposure by increasing allocations to underrepresented sectors like healthcare or consumer staples could enhance stability. This approach would reduce reliance on a single sector's performance and provide a more even distribution of risk across different economic cycles.

Regions

  • North America
    99%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%
  • Africa/Middle East
    0%

The portfolio is heavily concentrated in North America, with 99.16% exposure, limiting geographic diversification. This focus increases vulnerability to regional economic changes and currency fluctuations. Expanding exposure to international markets, such as Europe or Asia, could provide diversification benefits and help mitigate risks associated with domestic market downturns. A more globally diversified portfolio can capture growth opportunities in different regions and reduce dependency on the US economy, enhancing overall investment resilience.

Redundant positions

  • Schwab U.S. Large-Cap Growth ETF
    Invesco NASDAQ 100 ETF
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, such as the Schwab U.S. Large-Cap Growth ETF and Invesco NASDAQ 100 ETF. High correlation means these assets often move in the same direction, which can limit diversification benefits. During market downturns, this could lead to amplified losses. To enhance diversification, consider replacing some of these correlated assets with others that have lower correlation to the existing holdings. This strategy can help spread risk more effectively and improve the portfolio's resilience to market volatility.

Dividends

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.19%

The portfolio's dividend yield stands at 1.19%, with the Schwab U.S. Dividend Equity ETF contributing the most at 3.7%. Dividends can provide a steady income stream and enhance total returns, especially in low-growth environments. For investors seeking income, increasing exposure to high-dividend-yielding assets could be beneficial. However, it's important to balance this with growth-oriented investments to maintain a well-rounded portfolio. Consider reviewing the dividend yields of individual holdings and adjusting allocations to achieve the desired income and growth balance.

Ongoing product costs

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.06%, indicating cost-effective management. Lower costs can significantly enhance long-term returns by minimizing the drag on performance. This efficient cost structure aligns well with best practices for maximizing investor returns. While the current costs are favorable, periodically reviewing the expense ratios of existing and potential new investments can ensure continued cost efficiency. Maintaining low costs is crucial for optimizing the portfolio's performance over time and achieving investment goals.

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 aims to achieve the best possible risk-return ratio. Currently, the portfolio's high correlation among assets suggests room for improvement. By reducing overlap and adjusting allocations, the portfolio can move closer to the Efficient Frontier, enhancing potential returns for a given level of risk. This process involves analyzing the risk-return trade-offs of different asset combinations and making strategic adjustments to align with desired investment outcomes.

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