Balanced portfolio with strong tech focus and moderate international diversification

Report created on Feb 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of four ETFs, with iShares Core Equity Portfolio making up 50%, Horizons NASDAQ-100® Index ETF 25%, iShares Core MSCI EAFE IMI 15%, and Fidelity Advantage Bitcoin ETF™ 10%. This composition leans heavily on equities, with a notable allocation to technology via the NASDAQ-100 ETF. The inclusion of a Bitcoin ETF adds a layer of alternative exposure, which is less common in balanced portfolios. This setup aligns with a balanced risk profile, offering growth potential while maintaining some diversification across asset classes. To further enhance diversification, consider adjusting allocations to include more diverse asset types.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.42%. This indicates strong growth over time, significantly outperforming many traditional benchmarks. However, it has also experienced a maximum drawdown of -25.83%, highlighting potential volatility. The performance is concentrated, with 90% of returns occurring on just 15 days, suggesting that timing and market conditions play a crucial role. While past performance is promising, it's important to remember that it doesn't guarantee future results. Regularly reviewing performance against benchmarks can help ensure continued alignment with investment goals.

Projection Info

The forward projection, based on Monte Carlo simulations, shows a wide range of potential outcomes. Using historical data, the simulations estimate an annualized return of 19.49%, with a 5th percentile outcome of -7.5% and a 67th percentile outcome of 1,063.4%. These projections provide a sense of possible future performance, but it's crucial to remember they are based on historical trends and assumptions, which may not hold true. Regularly revisiting projections and adjusting expectations as market conditions change can help manage risk and align with long-term goals.

Asset classes Info

  • US Equity
    47%
  • Stocks
    12%
  • Other
    10%

The portfolio's asset class allocation is primarily in US equities (47%) and other equities (12%), with a small portion in alternative investments (10%). This distribution suggests a strong focus on equity markets, which can drive growth but also increase volatility. Compared to typical balanced portfolios, this allocation is more equity-heavy, which might appeal to those seeking higher returns with some risk. To enhance diversification, consider increasing exposure to fixed income or other asset classes, which can provide stability during market downturns and reduce overall portfolio risk.

Sectors Info

  • Technology
    25%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector exposure is heavily tilted towards technology (25%), followed by financial services (13%) and consumer cyclicals (10%). This concentration in tech aligns with recent trends, where tech stocks have driven significant market gains. However, it also introduces higher volatility, especially during periods of interest rate changes or regulatory shifts. A more balanced sector allocation could mitigate risks associated with sector-specific downturns. Diversifying into less represented sectors like utilities or real estate might provide more stability and reduce reliance on tech performance.

Regions Info

  • North America
    59%
  • Europe Developed
    18%
  • Japan
    7%
  • Australasia
    2%
  • Asia Developed
    2%
  • Asia Emerging
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America (59%), with some exposure to Europe Developed (18%) and Japan (7%). This allocation provides a solid base in established markets but lacks significant exposure to emerging markets, which can offer growth opportunities. Compared to global benchmarks, this portfolio is underweight in regions like Latin America and Asia Emerging, which could enhance diversification and reduce regional risk. Consider gradually increasing exposure to these areas to capture potential growth and reduce reliance on North American markets.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    15%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap (42%) and big-cap (30%) stocks, with smaller allocations to medium (15%), small (3%), and micro (1%) caps. This focus on larger companies can provide stability and lower volatility, as these firms often have established revenue streams and market presence. However, it may limit exposure to the growth potential of smaller companies. Balancing the allocation to include more mid and small-cap stocks could enhance growth prospects and offer better diversification, aligning with a balanced risk profile.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset allocations. This approach focuses on maximizing returns for a given level of risk or minimizing risk for a desired return. The current asset mix offers room for optimization, especially by balancing the equity-heavy allocation with more diverse assets. Adjusting the weightings between existing assets could enhance efficiency, aligning with the balanced risk profile while maintaining growth potential. Regularly reassessing and fine-tuning the portfolio can ensure it remains efficient.

Dividends Info

  • iShares Core MSCI EAFE IMI 1.60%
  • iShares Core Equity Portfolio 1.90%
  • Weighted yield (per year) 1.19%

The portfolio's dividend yield is relatively modest, with the iShares Core MSCI EAFE IMI offering 1.60% and the iShares Core Equity Portfolio yielding 1.90%. Overall, the portfolio's total yield is 1.19%, which is typical for growth-focused investments. Dividends can provide a steady income stream and contribute to total returns, particularly in volatile markets. For investors seeking more consistent income, increasing exposure to high-dividend stocks or dividend-focused ETFs could be beneficial. Balancing growth and income needs is essential for aligning with long-term financial goals.

Ongoing product costs Info

  • Horizons NASDAQ-100® Index ETF 0.25%
  • Weighted costs total (per year) 0.06%

The portfolio's costs are competitive, with the Horizons NASDAQ-100® Index ETF having a Total Expense Ratio (TER) of 0.25% and a total portfolio TER of 0.06%. These low costs support better long-term performance by minimizing drag on returns. Lower fees mean more of your money is working for you, compounding over time. Maintaining a focus on cost-effective investments is crucial, as even small differences in fees can significantly impact returns over the long term. Regularly reviewing and optimizing fees can help maximize portfolio efficiency.

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