Balanced portfolio with strong North American focus and low international diversification

Report created on Feb 16, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 100% of assets in stock-based funds and a single stock, Realty Income Corp. This composition aligns with a balanced risk profile, though it lacks diversification across asset classes like bonds or cash. A more diversified portfolio might include bonds to buffer against stock market volatility. Consider integrating alternative asset classes to enhance stability, especially in volatile markets.

Growth Info

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 13.91%. This is impressive compared to typical market benchmarks, suggesting effective asset selection. However, the maximum drawdown of -34.40% highlights periods of significant volatility. Investors should be aware that past performance is not indicative of future results, and consider strategies to mitigate potential downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows a median return of 368.7% over the investment horizon. With 981 out of 1,000 simulations showing positive returns, the outlook appears favorable. However, it's crucial to note that these are hypothetical projections and actual results may vary due to unforeseen market conditions. Diversifying further could help manage potential risks.

Asset classes Info

  • Stocks
    100%

The portfolio's sole reliance on equities limits its diversification benefits. Typically, a balanced portfolio might include bonds or other asset classes to reduce risk. While stocks offer growth potential, incorporating bonds could provide stability during market downturns. Consider adding fixed-income assets to achieve a more diversified and risk-adjusted portfolio.

Sectors Info

  • Technology
    29%
  • Financials
    12%
  • Health Care
    11%
  • Telecommunications
    8%
  • Industrials
    7%
  • Real Estate
    6%
  • Consumer Staples
    6%
  • Consumer Discretionary
    5%
  • Consumer Discretionary
    5%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    1%

The sector allocation is tech-heavy, with 29% in technology, which may lead to higher volatility, especially during interest rate hikes. The portfolio is diversified across various sectors, yet its concentration in technology could be risky. Balancing sector exposure by increasing allocations in less represented sectors like utilities or basic materials could enhance stability.

Regions Info

  • North America
    99%

The portfolio is heavily concentrated in North America, with 99% exposure, limiting geographic diversification. While North American markets have historically performed well, global diversification can reduce regional risks. Consider increasing international exposure, particularly in emerging markets, to potentially enhance returns and mitigate regional downturns.

Market capitalization Info

  • Large-cap
    38%
  • Mega-cap
    37%
  • Mid-cap
    19%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is well-distributed across market capitalizations, with a significant focus on large and mega-cap stocks. This allocation provides stability and growth potential, though it may limit exposure to the high-growth opportunities typically found in small-cap stocks. Diversifying further into small or mid-cap stocks could enhance 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 could potentially be optimized using the Efficient Frontier, which suggests the best possible risk-return ratio based on current assets. This involves adjusting allocations to achieve maximum return for a given level of risk. Consider rebalancing to align with the Efficient Frontier, ensuring the portfolio remains efficient without compromising diversification goals.

Dividends Info

  • Fidelity Total Market Index Fund 0.20%
  • Realty Income Corp 5.80%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Weighted yield (per year) 1.21%

The portfolio has a moderate dividend yield of 1.21%, with Realty Income Corp contributing significantly. Dividends can provide a steady income stream, which is beneficial for income-focused investors. While the yield is moderate, reinvesting dividends can enhance long-term growth. Consider balancing growth and income by adjusting dividend-focused allocations.

Ongoing product costs Info

  • Fidelity Total Market Index Fund 0.02%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) is impressively low at 0.03%, supporting better long-term performance by minimizing costs. Low fees are advantageous as they allow more of your investment returns to be reinvested, compounding over time. Maintaining low-cost investments is a positive strategy for optimizing net returns.

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