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A balanced portfolio with strong US focus and moderate sector diversification

Report created on Jul 2, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed predominantly of ETFs, with a significant portion allocated to large-cap US equities. The Vanguard S&P 500 ETF accounts for 55% of the portfolio, reflecting a strong focus on established US companies. The Invesco NASDAQ 100 ETF adds a 20% allocation, emphasizing technology and growth stocks. Smaller allocations include the Avantis U.S. Small Cap Value ETF (10%), Vanguard Total International Stock Index Fund ETF (10%), and VanEck Semiconductor ETF (5%). This composition suggests a strategy aimed at growth with moderate diversification. To enhance diversification, consider adding assets from different classes, such as bonds or real estate, to balance risk and potential returns.

Growth Info

Historically, this portfolio has demonstrated robust performance, evidenced by a compound annual growth rate (CAGR) of 16.82%. This indicates a strong return over time, outperforming many traditional benchmarks. However, it's important to note the maximum drawdown of -26.4%, highlighting the potential for significant short-term losses. Such a drawdown suggests that while the portfolio can generate high returns, it is also susceptible to market volatility. Investors should be prepared for fluctuations and consider strategies to mitigate risk, such as diversification or hedging, to protect against downturns.

Projection Info

The Monte Carlo simulation provides a forward-looking projection of potential portfolio outcomes based on historical data. With 1,000 simulations, the analysis shows a wide range of possible returns, with the 5th percentile at 130.63% and the 67th percentile at 1,322.77%. The median simulation suggests an 861.95% return, indicating a favorable outlook. However, it's crucial to remember that these projections are based on past data and cannot account for future market changes or unexpected events. Regularly reviewing and adjusting the portfolio can help align with evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.78% of the total allocation. This strong equity focus can lead to higher returns but also increases exposure to market volatility. The lack of significant allocations in other asset classes, such as bonds or cash, limits diversification and could expose the portfolio to greater risk during market downturns. To reduce volatility and enhance stability, consider incorporating fixed-income securities or alternative investments. This can help create a more balanced portfolio that aligns with long-term financial objectives while managing risk effectively.

Sectors Info

  • Technology
    35%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is concentrated, with technology making up 35.31% of the portfolio. Other sectors, such as financial services (12.18%) and consumer cyclicals (11.05%), provide some diversification. However, this concentration in technology suggests a dependency on the performance of tech stocks, which can be volatile. A downturn in the tech sector could significantly impact overall portfolio performance. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like real estate or utilities. This approach can help balance the portfolio and reduce reliance on any single sector's performance.

Regions Info

  • North America
    89%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Japan
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North American assets, comprising 88.77% of the allocation. This focus on the US market provides exposure to a stable, mature economy but limits international diversification. While developed markets in Europe and Asia are represented, they account for a small portion of the portfolio. Increasing exposure to emerging markets or other regions could enhance diversification and capture growth opportunities outside the US. This strategy can help reduce regional risk and provide a more balanced global investment approach, aligning with broader economic trends.

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.

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The portfolio can potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation among current assets, it's possible to enhance efficiency without necessarily increasing diversification. This process involves identifying the optimal mix of assets that maximizes returns for a given level of risk. Investors should periodically reassess their portfolio's positioning on the Efficient Frontier to ensure alignment with their risk tolerance and financial goals. This strategy can help maintain a balanced approach to risk and return over time.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.24%

The portfolio's dividend yield stands at 1.24%, with contributions from various ETFs. The Vanguard Total International Stock Index Fund ETF offers the highest yield at 2.9%, while others like the VanEck Semiconductor ETF provide lower yields. While dividends can enhance total returns and provide income, the portfolio's focus on growth-oriented ETFs may limit dividend income. Investors seeking higher income streams might consider increasing exposure to dividend-paying stocks or funds. Balancing growth and income objectives can help achieve a more comprehensive investment strategy aligned with personal financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is relatively low at 0.1%, reflecting cost-efficient management. The Vanguard S&P 500 ETF, with a minimal expense ratio of 0.03%, contributes significantly to this efficiency. However, the VanEck Semiconductor ETF has a higher cost at 0.35%, which could impact net returns. Minimizing costs is crucial for maximizing long-term performance, as fees can erode gains over time. Regularly reviewing and optimizing the portfolio's expense structure can help ensure that costs remain competitive, allowing more of the investment returns to benefit the investor.

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