A balanced portfolio with high dividend focus and strong tech presence

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio's composition heavily leans on three ETFs, with Schwab U.S. Dividend Equity ETF taking up half of the allocation. The other two ETFs, Invesco NASDAQ 100 and Vanguard Total Stock Market, make up the rest. This structure suggests a focus on dividend income and broad market exposure. Compared to a typical balanced portfolio, this one is less diversified, concentrating more on dividends and tech-heavy assets. Consider incorporating a wider range of asset classes, such as bonds or international equities, to enhance diversification and reduce risk.

Growth Info

Historically, the portfolio has delivered a CAGR of 10.56%, indicating strong growth potential. However, it faced a significant maximum drawdown of 22.82%, reflecting vulnerability during market downturns. Compared to benchmarks, this performance is commendable, though the concentrated exposure may have contributed to the volatility. To mitigate future drawdowns, consider diversifying across more sectors and asset classes, which could provide a cushion during turbulent times and enhance stability.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows a wide range of potential outcomes, from a 5th percentile return of 14% to a 67th percentile return of 385.4%. These projections highlight the inherent uncertainty in investing and the limitations of relying solely on historical data. While the median annualized return is a promising 10.91%, diversifying further could potentially smooth out the extremes and offer more consistent returns. Regularly reviewing and adjusting the portfolio in response to market changes is advisable.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to bonds, real estate, or other asset classes. This lack of diversification can expose the portfolio to higher risk, especially during market volatility. Typically, a balanced portfolio includes a mix of asset classes to spread risk and stabilize returns. Consider adding fixed income or alternative investments to balance the risk profile and potentially enhance returns, especially in uncertain economic conditions.

Sectors Info

  • Technology
    27%
  • Health Care
    13%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Consumer Staples
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Energy
    7%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is notably concentrated in the technology sector, which constitutes 27% of the allocation. While this sector has driven significant growth in recent years, it also presents higher volatility, particularly during interest rate hikes. The remaining sectors, such as healthcare and financial services, provide some balance but are underrepresented. To mitigate risk, consider increasing exposure to underweighted sectors like utilities or real estate, which may offer more stability and income.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with 99% of the assets based there. This concentration limits exposure to international markets, which could provide diversification benefits and reduce regional risk. By incorporating more investments from Europe, Asia, or emerging markets, the portfolio could better capture global growth opportunities and hedge against potential downturns in the U.S. market.

Market capitalization Info

  • Large-cap
    50%
  • Mega-cap
    24%
  • Mid-cap
    21%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards large-cap stocks, with big and mega-cap stocks making up 74% of the allocation. While large-cap stocks are generally more stable, the lack of exposure to small and mid-cap stocks can limit growth potential. Including more small and mid-cap stocks could enhance diversification and offer higher growth opportunities, albeit with increased risk. Balancing the market cap exposure can provide a more robust risk-return profile.

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 seeks the best possible risk-return ratio. By adjusting the weightings of existing assets, you might achieve a more efficient portfolio without necessarily adding new investments. This approach focuses on maximizing returns for a given level of risk. Regularly reassessing the portfolio's efficiency can help in maintaining an optimal balance as market conditions change.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 2.61%

The portfolio's dividend yield is 2.61%, primarily driven by the Schwab U.S. Dividend Equity ETF. This yield provides a steady income stream, beneficial for investors seeking regular cash flow. While dividends can enhance returns, they should be balanced with growth-oriented investments to ensure overall portfolio performance. Evaluating the sustainability of dividend payments and potentially reinvesting dividends can further boost long-term growth.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is an impressively low 0.08%, which supports better long-term performance by minimizing costs. Lower fees mean more of the portfolio's returns stay in your pocket, enhancing compounding effects over time. Regularly reviewing and comparing expense ratios against similar funds can ensure cost efficiency. If considering additional investments, prioritize low-cost options to maintain this advantage.

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