A cautious portfolio with high diversification and a moderate focus on gold and dividends

Report created on Dec 31, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of ETFs, with significant allocation to gold (25%) and broad market indexes. This structure reflects a cautious investor profile, aiming for stability with exposure to various asset classes. Compared to common benchmarks, this portfolio is more conservative due to its substantial gold holding, which acts as a hedge against market volatility. To enhance this balance, consider maintaining or slightly increasing exposure to equities for potential growth while keeping the gold allocation for stability.

Growth Info

Historically, the portfolio has achieved a respectable Compound Annual Growth Rate (CAGR) of 8.99%, with a maximum drawdown of -23.48%. This performance is in line with cautious investment strategies, offering moderate returns with limited risk. Compared to benchmarks, this portfolio's drawdown is slightly higher, indicating potential volatility. To mitigate future risks, consider rebalancing periodically to maintain alignment with your risk tolerance, ensuring that the portfolio remains resilient during market downturns.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes. With an annualized return of 9.71% across simulations, the portfolio demonstrates robust potential. However, the reliance on historical data means these projections are not guaranteed. To prepare for varying market conditions, consider stress testing the portfolio under different scenarios and adjusting allocations if necessary to ensure alignment with your long-term financial goals.

Asset classes Info

  • Stocks
    59%
  • Other
    25%
  • Bonds
    15%
  • Cash
    1%

The allocation across asset classes is well-diversified, with stocks making up 59%, bonds at 15%, and gold at 25%. This mix provides a solid foundation for risk management, balancing growth potential with stability. Compared to typical benchmarks, the gold allocation is notably higher, which may dampen growth during bull markets. To optimize, consider assessing the gold portion's impact on overall returns and adjust if needed to better align with your risk and return objectives.

Sectors Info

  • Technology
    13%
  • Financials
    10%
  • Health Care
    7%
  • Industrials
    7%
  • Consumer Discretionary
    6%
  • Consumer Staples
    4%
  • Telecommunications
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is diverse, with technology, financial services, and healthcare leading the way. This balance aligns well with benchmark norms, providing exposure to growth and defensive sectors alike. However, the concentration in technology could increase volatility, especially during interest rate fluctuations. To enhance resilience, consider diversifying further into underrepresented sectors, ensuring the portfolio can withstand various economic cycles without compromising growth potential.

Regions Info

  • North America
    41%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The geographic exposure is heavily weighted towards North America (41%), with limited exposure to emerging markets. This focus provides stability but may limit growth opportunities from faster-growing regions. Compared to benchmarks, the portfolio is underexposed to regions like Asia and Latin America. To capitalize on global growth, consider gradually increasing exposure to these areas, ensuring a more balanced geographic distribution that aligns with your investment goals.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. equity ETFs. This correlation limits diversification benefits, as these assets tend to move together during market shifts. To enhance diversification, consider reducing overlap by selecting complementary assets that provide distinct risk-return profiles. This adjustment can help mitigate potential losses during downturns and improve overall portfolio resilience.

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 could benefit from optimization using the Efficient Frontier, which focuses on achieving the best risk-return ratio. By adjusting the allocation among existing assets, you can potentially enhance performance without increasing risk. This approach does not require adding new assets but rather reallocating current ones to achieve greater efficiency. Consider consulting with a financial advisor to explore this strategy and ensure it aligns with your investment objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.98%

The portfolio's dividend yield stands at 1.98%, with contributions from various ETFs. This yield provides a steady income stream, which is beneficial for cautious investors seeking regular returns. Compared to benchmarks, the yield is moderate, reflecting a balance between income and growth. To maximize income potential, consider reviewing the dividend policies of current holdings and exploring higher-yielding alternatives that align with your risk tolerance and income needs.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR® Gold Shares 0.40%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) of 0.14% is impressively low, supporting better long-term performance by minimizing costs. This cost efficiency is a strong point, aligning with best practices for maximizing net returns. To maintain this advantage, continue monitoring fund fees and consider switching to lower-cost alternatives if they become available, ensuring that costs remain manageable and do not erode your portfolio’s overall returns.

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