A highly diversified portfolio with a cautious risk profile and strong North American focus

Report created on Dec 23, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of six ETFs, with a significant allocation to the Vanguard Total Stock Market Index Fund ETF Shares at 45%. The remaining assets are spread across international stocks, commodities, real estate, currency, and treasury bonds. This composition suggests a preference for broad market exposure while maintaining a conservative stance. Compared to typical benchmark compositions, this portfolio leans heavily on equities, but includes other asset classes for diversification. To further enhance diversification, consider increasing exposure to asset classes with lower allocations.

Growth Info

The portfolio's historical performance shows a Compound Annual Growth Rate (CAGR) of 12.34%, with a maximum drawdown of -20.3%. This indicates strong past returns but with notable volatility. Compared to common benchmarks, this performance is quite competitive, offering a balance of growth and risk. However, it's essential to remember that past performance doesn't guarantee future results. To mitigate potential future drawdowns, consider strategies to further diversify or hedge against market downturns.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. With 1,000 simulations, the 50th percentile projects a 214.83% return, while the 5th percentile shows a 36.02% return. This illustrates the uncertainty of future performance, emphasizing the importance of a diversified portfolio. While the overall outlook is positive, maintaining a cautious approach by regularly reviewing and adjusting the portfolio is advisable to align with changing market conditions.

Asset classes Info

  • Stocks
    66%
  • Cash
    16%
  • Real Estate
    10%
  • Bonds
    8%

The portfolio's allocation across asset classes includes 66.46% in stocks, 15.51% in cash, 10% in real estate, and 8% in bonds. This mix aligns with a cautious risk profile, providing both growth and stability. Compared to benchmark norms, the cash allocation is relatively high, which can act as a buffer during market volatility. To optimize growth potential, consider gradually increasing exposure to asset classes that traditionally offer higher returns, while maintaining a balanced risk approach.

Sectors Info

  • Technology
    17%
  • Real Estate
    12%
  • Financials
    11%
  • Industrials
    7%
  • Health Care
    7%
  • Consumer Discretionary
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%

Sector allocation is diverse, with technology and real estate leading at 16.74% and 11.98%, respectively. This mirrors common benchmarks, suggesting a well-balanced sector exposure. However, the portfolio could be susceptible to sector-specific risks, such as tech volatility during interest rate changes. To mitigate this, consider periodically reviewing sector weights and adjusting exposure to align with economic trends and personal investment goals, ensuring continued diversification and risk management.

Regions Info

  • North America
    57%
  • Europe Developed
    9%
  • Asia Emerging
    4%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America at 56.55%, with smaller allocations in Europe, Asia, and other regions. This focus on North America aligns with the client's region, potentially reducing currency risk. However, it limits exposure to emerging markets, which can offer growth opportunities. To enhance geographic diversification, consider increasing allocations to underrepresented regions, balancing potential risks and rewards associated with different global markets.

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 be optimized using the Efficient Frontier, which seeks the best risk-return balance. Currently, the portfolio's expected return is below the optimal level, suggesting room for improvement. By adjusting the allocation among existing assets, it's possible to enhance returns without increasing risk. However, remember that efficiency focuses on risk-return ratios and may not account for other goals like diversification. Regularly reviewing and rebalancing can help maintain an efficient portfolio.

Dividends Info

  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 1.58%

The portfolio's total dividend yield is 1.58%, with contributions from various ETFs. Dividends provide a steady income stream and can enhance total returns, especially in a cautious portfolio. While the yield is moderate, it aligns with the portfolio's risk profile, offering income without significant exposure to high-yield, high-risk assets. To boost income, consider selectively increasing holdings in dividend-paying assets, ensuring they align with broader investment goals and risk tolerance.

Ongoing product costs Info

  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • The Real Estate Select Sector SPDR Fund 0.09%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is impressively low. This cost efficiency supports better long-term performance, as lower fees mean more of your returns stay in your pocket. Compared to industry averages, this TER is quite competitive, reflecting a well-constructed portfolio. To maintain this advantage, regularly review the expense ratios of current holdings and explore opportunities to replace higher-cost assets with lower-cost alternatives, if available.

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