A conservative portfolio with high dollar exposure and limited sector diversity

Report created on Dec 21, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards ETFs, with the largest allocation to the WisdomTree Bloomberg U.S. Dollar Bullish Fund at 37.68%. The remaining investments are split between Direxion Auspice Broad Commodity Strategy ETF and Vanguard Total Stock Market Index Fund ETF Shares, each holding around 31%. This composition indicates a focus on currency and broad commodities, with a significant portion in equities. Compared to a typical conservative portfolio, this one is less diversified across asset types, suggesting a more concentrated strategy. It would be beneficial to consider introducing a broader range of asset types to enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 7.95%, indicating steady growth over time. However, it also experienced a maximum drawdown of -15.37%, suggesting vulnerability to market downturns. This performance is respectable, especially for a conservative profile, but there's room for improvement in risk management. Comparing this to benchmark indices, the portfolio's performance aligns well with expectations for conservative investments. To enhance stability, consider incorporating assets with lower volatility to mitigate drawdowns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a range of potential returns. With 1,000 simulations, the portfolio showed a median (50th percentile) return of 191.57% and an annualized return of 8.75%. While 977 simulations ended positively, it's important to note that past performance doesn't guarantee future results. The projections indicate a promising outlook, but diversifying into other asset classes could further stabilize potential future returns and reduce the impact of market fluctuations.

Asset classes Info

  • Bonds
    38%
  • Cash
    31%
  • Stocks
    31%

The portfolio's asset allocation is primarily in bonds (37.68%), cash (31.26%), and stocks (31.06%). While bonds and cash provide stability, the allocation to stocks offers growth potential. Compared to typical conservative benchmarks, this allocation is somewhat unconventional due to the high cash position. To enhance diversification, consider increasing exposure to other asset classes like real estate or international equities. This could help balance the portfolio's risk and return profile, aligning it more closely with traditional conservative portfolios.

Sectors Info

  • Technology
    10%
  • Financials
    4%
  • Health Care
    4%
  • Consumer Discretionary
    3%
  • Industrials
    3%
  • Telecommunications
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Real Estate
    1%
  • Utilities
    1%
  • Basic Materials
    1%

The sector allocation reveals a concentration in technology (9.58%), with other sectors like financial services, healthcare, and consumer cyclicals each holding less than 5%. This imbalance could lead to increased volatility, especially if the tech sector faces downturns. Compared to broader market benchmarks, the portfolio is under-diversified across sectors. Expanding into underrepresented sectors could provide more balanced exposure and reduce sector-specific risks. This approach would align the portfolio more closely with market trends and potentially enhance returns.

Regions Info

  • North America
    31%

The geographic allocation is heavily skewed towards North America (30.98%), with minimal exposure to other regions. This lack of international diversification could limit potential growth opportunities and increase risk if North American markets underperform. Compared to global benchmarks, the portfolio is notably underexposed to Europe, Asia, and emerging markets. Increasing geographic diversification can help mitigate regional risks and capitalize on global growth trends. Consider adding international assets to enhance the portfolio's resilience and growth potential.

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 portfolio's current configuration could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. By adjusting the allocation among existing assets, the portfolio can achieve a more favorable balance between risk and return. This process doesn't necessarily mean adding new assets but rather reallocating the current ones to maximize efficiency. It's important to note that this optimization focuses on the current asset mix and may not address other diversification goals. Regular reviews can ensure the portfolio remains aligned with investment objectives.

Dividends Info

  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 6.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Weighted yield (per year) 3.65%

The portfolio boasts a respectable total dividend yield of 3.65%, with the WisdomTree Bloomberg U.S. Dollar Bullish Fund contributing a significant 6.2%. Dividends provide a steady income stream, which is particularly appealing for conservative investors seeking income alongside capital preservation. This yield is competitive compared to typical conservative portfolios. To maintain or enhance this income stream, consider reinvesting dividends or exploring other high-yield assets. This approach can support long-term growth while providing consistent income.

Ongoing product costs Info

  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.45%

The total expense ratio (TER) for the portfolio is 0.45%, with the Direxion Auspice Broad Commodity Strategy ETF being the most costly at 0.8%. This cost is relatively low, supporting better long-term performance by minimizing the impact of fees on returns. Compared to industry averages, the portfolio's costs are competitive. However, continually assessing cost-efficiency is crucial. Consider replacing high-fee assets with lower-cost alternatives like index funds or ETFs to further optimize net returns. This strategy can enhance overall portfolio performance.

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