A balanced portfolio with strong U.S. focus and moderate international exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is ideal for an investor with a balanced risk tolerance, seeking growth while maintaining a degree of diversification. With a strong focus on U.S. equities and moderate international exposure, it suits those with a long-term investment horizon. The portfolio's equity-heavy nature indicates a preference for capital appreciation over income generation. Investors comfortable with market volatility and interested in leveraging historical U.S. market performance will find this structure appealing. It is well-suited for individuals aiming to build wealth steadily over time.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    25.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    25.00%

The portfolio consists of three ETFs, with a significant 50% allocation to the Vanguard S&P 500 ETF. The Schwab U.S. Large-Cap Growth ETF makes up 25% of the portfolio, while the Vanguard Total International Stock Index Fund ETF Shares also comprises 25%. This composition leans heavily toward U.S. equities, reflecting a common benchmark approach. A more diversified allocation could include additional asset classes like bonds or real estate to improve risk balance. However, the current structure provides a solid foundation for growth-focused investors, particularly those comfortable with equity market volatility.

Growth Info

A hypothetical investment in this portfolio would have experienced a robust CAGR of 12.32%, indicating strong historical performance. The portfolio's maximum drawdown of -33.39% highlights the inherent volatility associated with equity-heavy investments. While past performance is not indicative of future results, these figures suggest that the portfolio has navigated market fluctuations well. Comparing this to relevant benchmarks could offer additional insights. Investors should be prepared for similar volatility in the future and consider whether this aligns with their risk tolerance.

Projection Info

Using Monte Carlo simulations, which predict potential future outcomes based on historical data, the portfolio shows a median projected growth of 353.2%. While the 5th percentile suggests a possible decline, the simulations indicate a high probability of positive returns, with 989 out of 1,000 scenarios yielding gains. It's essential to remember that these projections are based on past data and are not guarantees. Investors should stay informed about market conditions and adjust their strategies as needed to navigate potential risks and opportunities effectively.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is predominantly composed of stocks, with a 99% allocation, and a minimal 1% in cash. This heavy weighting in equities aligns with a growth-oriented strategy but may expose investors to greater market volatility. Diversifying into other asset classes, such as bonds or real estate, could provide more stability and reduce risk. Comparing this allocation to common benchmarks, it is clear that the portfolio is aggressive in nature, suitable for investors with a higher risk tolerance and a focus on long-term growth.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector composition is heavily weighted towards technology, making up 31% of the allocation. This concentration may lead to higher volatility, particularly during periods of interest rate changes or tech market corrections. Other significant sectors include financial services and consumer cyclicals. While this sector distribution aligns with common benchmarks, investors should be aware of potential risks associated with sector concentration. A more balanced approach across sectors could help mitigate these risks and provide a smoother investment journey.

Regions Info

  • North America
    77%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

The portfolio has a strong geographic focus on North America, with 77% of assets allocated there. This concentration may limit exposure to growth opportunities in other regions. While Europe and Asia have some representation, emerging markets are notably underrepresented. Diversifying geographically could enhance the portfolio's resilience against regional economic downturns and tap into potential growth in international markets. Investors might consider increasing exposure to underrepresented regions to achieve a more balanced global allocation.

Market capitalization Info

  • Mega-cap
    50%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    2%
  • Micro-cap
    0%

The portfolio's allocation by market capitalization is heavily skewed towards mega and large-cap stocks, comprising 81% of the total. This focus on larger companies can provide stability but may limit growth potential compared to smaller, more dynamic firms. While medium and small caps are included, their impact is minimal. To enhance diversification and potentially increase returns, investors could consider increasing exposure to smaller-cap stocks, which historically offer higher growth prospects, albeit with increased volatility.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The Schwab U.S. Large-Cap Growth ETF and Vanguard S&P 500 ETF exhibit high correlation, meaning they tend to move in tandem. This correlation can limit diversification benefits, as both funds react similarly to market changes. Reducing overlap by adding less correlated assets could enhance the portfolio's resilience and improve risk-adjusted returns. Investors should assess whether the current correlation aligns with their diversification goals and consider alternative investments that offer distinct risk-return profiles.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.50%

The portfolio's overall dividend yield stands at 1.50%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 2.80%. While dividends provide a steady income stream, the portfolio's growth focus suggests that capital appreciation is the primary goal. Investors seeking higher income may want to consider increasing exposure to dividend-focused ETFs or stocks. However, for those prioritizing growth, the current yield is a reasonable complement to the portfolio's broader strategy.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

With a total expense ratio (TER) of 0.04%, the portfolio's costs are impressively low, contributing positively to long-term performance. Low expenses mean more of the portfolio's returns are retained by the investor, enhancing compounding effects over time. This cost efficiency aligns well with best practices for maximizing net returns. Investors should continue to monitor expense ratios and aim to maintain this low-cost structure, as it significantly impacts the portfolio's overall success.

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.

The portfolio's current asset allocation can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. However, the highly correlated assets within the portfolio limit diversification benefits. To achieve optimal efficiency, investors should consider reducing overlap and introducing less correlated assets. This approach can enhance the portfolio's risk-return profile, providing a more balanced and potentially more rewarding investment experience.

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