A balanced portfolio with strong US focus and growth potential

Report created on Mar 21, 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 composed mainly of ETFs, with heavy emphasis on the Vanguard S&P 500 ETF and Invesco NASDAQ 100 ETF, together making up 80% of the portfolio. This results in a significant concentration in large-cap US stocks. The remaining 20% is spread across a dividend-focused ETF and international equities. This composition aligns with a balanced portfolio strategy that seeks growth while maintaining some level of income through dividends. However, the heavy reliance on US equities may limit diversification benefits, particularly in times of US market volatility.

Growth Info

Historically, the portfolio has shown a strong performance with a CAGR of 13.48%. This impressive growth rate indicates significant capital appreciation over time. However, the portfolio also experienced a maximum drawdown of -26.48%, highlighting potential volatility. Compared to benchmarks, this performance is commendable, suggesting effective management. Yet, investors should remember that past performance doesn’t guarantee future results. It’s crucial to monitor market conditions and adjust strategies accordingly to maintain or improve this level of performance.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a median return of 383.6%. This method uses historical data to simulate future possibilities, providing insight into potential risks and rewards. While the majority of simulations resulted in positive returns, it’s important to note that these are hypothetical scenarios based on past data. Investors should be cautious, as market conditions can change unexpectedly. Regular review and adjustment of the portfolio can help manage risks and capitalize on opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to other asset classes like bonds or cash. This could lead to higher volatility compared to a more diversified portfolio that includes fixed-income securities. While a 100% equity allocation can drive growth, it may not suit investors seeking stability or income. To enhance diversification, consider incorporating other asset classes, which can help mitigate risks during market downturns and provide more balanced returns over the long term.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    10%
  • Industrials
    7%
  • Consumer Staples
    7%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The portfolio is heavily weighted towards technology, representing 35% of the total allocation. This concentration can lead to significant growth, especially if the tech sector continues to outperform. However, it also increases exposure to sector-specific risks, such as regulatory changes or technological disruptions. Balancing the portfolio with more exposure to other sectors, like healthcare or consumer defensive, can enhance stability and reduce volatility. This approach aligns with a more diversified investment strategy.

Regions Info

  • North America
    94%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

The portfolio's geographic allocation is predominantly North American, with 94% exposure. This heavy concentration in the US market provides familiarity and stability but limits international diversification. Exposure to other regions, such as emerging markets, is minimal. Including more global equities can enhance diversification and potentially improve returns by capturing growth in other economies. Consider adjusting the geographic allocation to balance risks and opportunities across different markets.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    39%
  • Mid-cap
    17%
  • Small-cap
    1%

The portfolio is primarily invested in mega and large-cap stocks, comprising 82% of the total allocation. These stocks offer stability and liquidity but may limit growth potential compared to mid or small-cap stocks. While large-cap companies are typically more established, incorporating a mix of smaller companies can enhance growth prospects and diversification. This balanced approach can help capture opportunities across different market segments and improve the overall risk-return profile.

Redundant positions Info

  • Vanguard Value Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard Value Index Fund ETF Shares and the Schwab U.S. Dividend Equity ETF. High correlation means these assets tend to move in the same direction, limiting diversification benefits. During market downturns, this could lead to increased losses. To improve diversification, consider reducing exposure to highly correlated assets and including investments with lower correlation. This strategy can enhance risk management and optimize the portfolio's overall performance.

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 current portfolio could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By focusing on asset allocation and reducing highly correlated holdings, the portfolio's efficiency could be improved. An optimized portfolio is expected to yield a higher return of 13.90% with a comparable risk level. This approach emphasizes maximizing returns for a given level of risk, rather than diversification. Adjusting the allocation among current assets can help achieve a more efficient portfolio.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.10%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Value Index Fund ETF Shares 2.30%
  • Weighted yield (per year) 1.21%

The portfolio has a modest dividend yield of 1.21%, with contributions mainly from the Schwab U.S. Dividend Equity ETF and Vanguard Value Index Fund ETF Shares. Dividends provide a steady income stream, which can be reinvested for compounding growth. For income-focused investors, this yield might be considered low. To increase income potential, consider reallocating to higher-yielding assets. However, balancing growth and income is crucial to maintaining the portfolio's overall strategy and risk profile.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, allowing more of your investment to compound over time. Maintaining this cost discipline is crucial, as even small changes in fees can impact long-term wealth accumulation. Regularly reviewing and comparing fund expenses can help ensure the portfolio remains cost-effective and competitive.

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