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A balanced portfolio with strong US focus and moderate risk suitable for steady growth

Report created on Jan 14, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification
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Positions

The portfolio consists of 80% equities and 20% bonds, providing a balanced approach to risk and return. This composition aligns with common balanced portfolios, which typically aim for a mix of growth and stability. The equities are diversified across domestic and international markets, while the bond allocation offers a buffer against volatility. This mix is generally suitable for investors seeking moderate growth without excessive risk. To enhance diversification, consider adding more international stocks or alternative assets, which can help in smoothing returns over time.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.3%, outperforming many benchmarks. However, it experienced a significant drawdown of -28.79%, indicating vulnerability during market downturns. This performance suggests that while the portfolio can deliver strong returns, it is not immune to market volatility. Investors should be aware that past performance does not guarantee future results. To mitigate future risks, consider incorporating assets with lower volatility or exploring hedging strategies.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, indicates a wide range of potential results for the portfolio. The 50th percentile suggests a growth of 227.65%, while the 5th percentile shows a much lower 21.74%. This highlights the uncertainty inherent in investing. While simulations provide a useful guide, they cannot account for unexpected market events. Regularly reviewing and adjusting the portfolio in response to changing market conditions can help manage risk and align with long-term goals.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%
  • Cash
    1%

The portfolio's asset allocation leans heavily towards stocks at nearly 80%, with bonds making up about 20%. This allocation is typical for balanced portfolios aiming for growth with moderate risk. The limited exposure to cash and other asset classes suggests a focus on maximizing returns through equities. While this strategy can be effective, adding more asset classes, such as real estate or commodities, could enhance diversification and potentially reduce risk. Balancing these allocations according to market conditions can optimize performance.

Sectors Info

  • Technology
    18%
  • Financials
    14%
  • Health Care
    10%
  • Industrials
    9%
  • Consumer Discretionary
    7%
  • Consumer Staples
    7%
  • Energy
    6%
  • Telecommunications
    5%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Consumer Discretionary
    1%

Sector allocation reveals a notable concentration in technology and financial services, comprising over 30% of the portfolio. This reflects a common trend in growth-focused portfolios but may increase susceptibility to sector-specific risks, such as regulatory changes or economic downturns. Other sectors, like healthcare and consumer cyclicals, provide additional diversification. To mitigate risks, consider adjusting sector weights to reduce overexposure and explore opportunities in underrepresented sectors, which can offer potential growth and stability.

Regions Info

  • North America
    70%
  • Europe Developed
    7%
  • Japan
    2%
  • Australasia
    1%

The portfolio is predominantly focused on North American assets, comprising nearly 70% of its geographic allocation. This concentration aligns with typical US-based portfolios but may limit exposure to international growth opportunities. The small allocations to Europe and Japan provide some diversification, yet emerging markets are underrepresented. Expanding geographic exposure can enhance diversification and potentially capture growth in regions with different economic cycles. Regularly reviewing geographic allocations can ensure they align with global market trends and investor goals.

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.

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The portfolio could potentially benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve maximum returns for a given level of risk. However, optimization does not guarantee diversification or address all investment goals. Regularly revisiting this process can help maintain an optimal balance as market conditions and personal circumstances change. Consider consulting with a financial advisor to explore optimization strategies tailored to your specific needs.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • iShares U.S. Dividend and Buyback 1.90%
  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 2.27%

With a total yield of 2.27%, dividends contribute to the portfolio's returns, providing a steady income stream. The inclusion of dividend-focused ETFs supports this strategy, offering both growth and income potential. For investors seeking income, maintaining or increasing dividend exposure can be beneficial. However, it's important to balance dividend yield with growth prospects, as high yields may sometimes indicate higher risk. Regularly reviewing dividend contributions and adjusting allocations can optimize income without compromising growth.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares U.S. Dividend and Buyback 0.05%
  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which supports better long-term performance by minimizing costs. This efficient cost structure is a strong point, as high fees can erode returns over time. Maintaining low costs should remain a priority, and investors might explore further cost-saving opportunities, such as switching to lower-cost funds or negotiating fees. Regularly reviewing the cost structure ensures that the portfolio remains efficient and aligned with financial goals.

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