Balanced portfolio with strong U.S. focus and limited diversification across sectors

Report created on Mar 10, 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 the Vanguard S&P 500 ETF, comprising 84% of the holdings, with the remainder in the Schwab U.S. Dividend Equity ETF. This structure indicates a strong bias towards large-cap U.S. equities. While such a composition can capture broad market performance, it lacks diversification. Diversification is crucial as it spreads risk across different asset types and sectors, potentially reducing volatility. To enhance diversification, consider adding other asset classes like bonds or international equities, which can provide stability during market downturns.

Growth Info

Historically, the portfolio has demonstrated a robust compound annual growth rate (CAGR) of 13.53%, outperforming many traditional benchmarks. This growth trajectory is impressive, though it comes with a maximum drawdown of -33.81%, indicating potential vulnerability during market corrections. Evaluating past performance helps set realistic expectations, but it's important to remember that past returns do not guarantee future success. Consider strategies to mitigate downside risks, such as incorporating assets with lower volatility.

Projection Info

Forward projections using Monte Carlo simulations suggest a range of potential outcomes. With 1,000 simulations, the portfolio shows a 5th percentile growth of 79.9% and a median growth of 419.8%. Monte Carlo simulations use historical data to predict future performance, but they have limitations as they can't account for unprecedented market events. Despite this, the high percentage of positive simulations (996 out of 1,000) is encouraging. Regularly reviewing asset allocation can help maintain alignment with financial goals as market conditions change.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in stocks, with no allocation to other asset classes like bonds or real estate. While stocks can offer high returns, they also carry higher risk. Diversifying across asset classes can reduce overall portfolio risk and provide a buffer during equity market downturns. Consider integrating fixed-income securities or alternative investments to balance the risk-return profile and achieve a more comprehensive diversification strategy.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Energy
    5%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation reveals a significant concentration in technology (30%), followed by financial services (14%) and consumer cyclicals (11%). This concentration can expose the portfolio to sector-specific risks, such as regulatory changes or economic shifts affecting these industries. A more balanced sector allocation can help mitigate such risks. Consider diversifying into underrepresented sectors to enhance stability and capture potential growth in varied economic environments.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The geographic allocation is heavily skewed towards North America, with 99% exposure. This concentration limits international diversification, potentially increasing vulnerability to U.S.-specific economic and political risks. Global diversification can enhance resilience by tapping into growth opportunities in other regions. Explore increasing exposure to developed and emerging markets to achieve a more balanced geographic distribution and reduce reliance on the U.S. market.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    38%
  • Mid-cap
    20%
  • Small-cap
    1%

The portfolio is predominantly invested in mega-cap (40%) and big-cap (38%) stocks, with minimal exposure to small-cap companies. This focus on large-cap stocks can provide stability and consistent returns, but it may limit growth potential. Small-cap stocks, while riskier, can offer higher growth opportunities. Consider adjusting the market capitalization mix to include a modest allocation to small- and mid-cap stocks to capture potential upside in different market conditions.

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's current allocation could be optimized using the Efficient Frontier, which identifies the best possible risk-return balance. The Efficient Frontier is a concept that helps determine the ideal asset mix for maximizing returns at a given level of risk. By adjusting the allocation between existing assets, the portfolio could achieve a more efficient risk-return ratio. Regularly reviewing asset weights and making slight adjustments can help maintain optimal performance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.50%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.65%

The portfolio's dividend yield stands at 1.65%, with contributions from both ETFs. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. A focus on dividend-paying stocks can also indicate financial health and stability. However, relying solely on dividends may limit growth potential. Consider balancing income-generating assets with growth-oriented investments to achieve a comprehensive return strategy.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.03%. Low costs are advantageous as they enhance net returns over time, allowing more of the investment to compound. Keeping costs minimal is a positive aspect of this portfolio, enabling better performance relative to higher-cost alternatives. Continue monitoring expense ratios to ensure they remain competitive and consider cost-effective rebalancing strategies to maintain this advantage.

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