A balanced portfolio with a strong emphasis on U.S. equities and moderate diversification

Report created on Jan 5, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with 50% in the Vanguard S&P 500 ETF and 20% in the Vanguard Total Stock Market Index Fund ETF. This composition reflects a focus on large-cap U.S. stocks, which are often seen as stable and reliable investments. The remaining 30% is spread across small-cap value stocks, technology-focused NASDAQ 100, and international equities. While the portfolio is diversified across different market segments, it leans heavily towards U.S. markets. To enhance diversification, consider increasing exposure to non-U.S. markets or other asset classes.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 15.11%. This strong performance is reflective of the robust growth seen in U.S. equities over recent years. However, the maximum drawdown of -24.79% indicates vulnerability during market downturns. Comparing this to benchmarks, the portfolio's performance aligns closely with major U.S. indices. While past performance is not indicative of future results, maintaining a diversified approach may help mitigate potential drawdowns in the future.

Projection Info

Monte Carlo simulations, which use historical data to project potential future outcomes, suggest a favorable outlook for this portfolio. With a median projected return of 571.42% and 992 out of 1,000 simulations showing positive returns, the portfolio is well-positioned for growth. However, it's important to note that these simulations are based on historical trends and cannot predict future market conditions. Regularly reviewing and adjusting the portfolio to align with changing market dynamics can help maintain its growth trajectory.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, with 99.7% allocated to equities. This allocation provides significant growth potential but also comes with increased risk. The minimal allocation to cash and other assets suggests a focus on long-term capital appreciation rather than income or capital preservation. To enhance diversification and potentially reduce risk, consider incorporating other asset classes such as bonds or real estate, which can provide stability and income during volatile market periods.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio has significant exposure to the technology sector, accounting for nearly 30% of the total allocation. While this sector has driven impressive returns in recent years, it can also be subject to volatility, particularly during periods of regulatory scrutiny or interest rate changes. The allocation across other sectors, such as financial services and consumer cyclicals, adds balance. However, consider reviewing sector allocations periodically to ensure they align with broader economic trends and your risk tolerance.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With nearly 90% of assets allocated to North America, the portfolio is heavily concentrated in the U.S. market. While this provides exposure to one of the world's largest and most dynamic economies, it also limits global diversification. The remaining 10% is spread thinly across other regions, offering minimal exposure to emerging markets and Europe. To enhance geographic diversification, consider increasing allocations to international markets, which may offer growth opportunities and reduce reliance on U.S. market performance.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF. This high correlation means that these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, the lack of diversification can increase portfolio risk. To improve diversification, consider reducing exposure to overlapping assets and incorporating investments with low or negative correlations to the existing portfolio.

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, a concept that identifies the best risk-return ratio for a given set of assets. By adjusting the allocation between existing assets, you may achieve a more efficient portfolio without necessarily adding new investments. This process can help balance risk and return, ensuring that the portfolio is aligned with your financial goals. It's important to review and rebalance the portfolio periodically to maintain this optimal allocation.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • 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) 1.42%

The portfolio's overall dividend yield is 1.42%, with the highest contribution from the Vanguard Total International Stock Index Fund ETF at 3.4%. Dividends provide a steady income stream, which can be reinvested to enhance returns or used to fund expenses. While the current yield is modest, it complements the portfolio's growth-oriented focus. For investors seeking higher income, exploring dividend-focused funds or stocks could be beneficial, but ensure this aligns with your overall investment strategy and risk tolerance.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • 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) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the inclusion of cost-effective ETFs like the Vanguard S&P 500 ETF. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. The cost structure aligns well with best practices for efficient investing. However, always remain vigilant about potential changes in fund fees and consider replacing any higher-cost assets with lower-cost alternatives if they become available.

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