A balanced portfolio with strong US focus and potential for moderate growth

Report created on Jan 2, 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 four ETFs making up the entirety of the investment. The largest holding is the Vanguard Total Stock Market Index Fund ETF Shares, comprising 67% of the portfolio. This is complemented by smaller allocations to the Avantis U.S. Small Cap Value ETF, Invesco NASDAQ 100 ETF, and Vanguard S&P 500 ETF, each at 11%. Compared to a typical balanced portfolio, this one is less diversified, as it lacks exposure to bonds or alternative assets. To enhance diversification, consider incorporating other asset classes like bonds or real estate.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.47%. This is impressive compared to many benchmarks, indicating strong past performance. However, the maximum drawdown of -24.89% suggests significant volatility during downturns. While past performance can offer insights, it's not a guarantee of future results. To mitigate potential risks, consider periodic rebalancing and reviewing the portfolio's sensitivity to market changes.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows a range of potential returns for the portfolio. With 1,000 simulations, the median outcome is a 768.75% return, and the worst-case scenario is still positive at 147.89%. While these projections are encouraging, it's essential to remember that they are based on historical data and assumptions. Regularly reassess your portfolio to ensure it aligns with evolving financial goals and market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, accounting for nearly 100% of the allocation. This lack of diversification across asset classes increases exposure to equity market risks. Compared to a balanced benchmark, which often includes bonds and other asset classes, this portfolio may be more volatile. Adding fixed income securities, such as bonds, can reduce risk and provide a buffer during equity downturns, enhancing overall stability.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation shows a significant tilt towards technology, which makes up over 30% of the portfolio. Other sectors like financial services and consumer cyclicals also have substantial representation. This concentration can lead to increased volatility, especially during economic shifts affecting these sectors. A more balanced sector allocation could help mitigate risks associated with sector-specific downturns. Consider diversifying into underrepresented sectors to achieve a more stable portfolio.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic exposure is heavily skewed towards North America, with over 99% of assets based in this region. This lack of international diversification may limit potential growth opportunities in emerging markets and expose the portfolio to regional economic risks. Compared to global benchmarks, this allocation is narrow. Expanding geographic exposure can provide diversification benefits and reduce reliance on the North American market.

Redundant positions Info

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

The assets within the portfolio, particularly the Vanguard Total Stock Market Index Fund ETF Shares and Vanguard S&P 500 ETF, are highly correlated. This means they tend to move in the same direction, reducing diversification benefits. In times of market downturns, this could amplify losses. To enhance diversification, consider replacing one of these ETFs with an asset that has a lower correlation to the rest of the portfolio, potentially reducing overall risk.

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 has room for optimization, particularly by addressing the high correlation between certain assets. The Efficient Frontier suggests that a more optimized portfolio could achieve a similar risk level with a slightly higher expected return of 18.09%. This involves reallocating assets to achieve the best possible risk-return ratio. Consider exploring different asset combinations to find an optimal balance that meets your return objectives while managing risk effectively.

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%
  • Weighted yield (per year) 1.24%

The portfolio's dividend yield is modest at 1.24%, with the highest yield coming from the Avantis U.S. Small Cap Value ETF at 1.6%. Dividends can provide a source of regular income and contribute to total returns, especially in volatile markets. For investors seeking income, increasing exposure to higher-yielding assets could be beneficial. However, it's important to balance yield with growth potential to maintain a well-rounded investment strategy.

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%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is low at 0.07%, which is advantageous for long-term returns. Lower costs mean more of your investment is working for you, rather than being eaten up by fees. This aligns well with best practices for cost efficiency. Regularly reviewing and comparing fund fees can ensure that your portfolio remains cost-effective. Consider exploring opportunities to further reduce costs, such as switching to even lower-cost funds if available.

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