A balanced portfolio with strong U.S. focus and moderate dividend yield

Report created on Mar 27, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 89% stocks, 10% bonds, and 1% cash. This structure aligns well with a balanced investment approach, offering potential for growth with some stability. The Vanguard S&P 500 ETF makes up 30% of the portfolio, providing broad exposure to large U.S. companies, while the Schwab U.S. Dividend Equity ETF adds 20% with a focus on income generation. The inclusion of the Invesco NASDAQ 100 ETF at 15% introduces a tech-oriented growth component. Overall, the composition is well-balanced, yet a slight increase in bond allocation could enhance stability during volatile periods.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 10.83%. This suggests a robust performance, likely driven by the U.S. stock market's resilience. However, it has experienced a maximum drawdown of -22.46%, indicating vulnerability during market downturns. Compared to a benchmark like the S&P 500, which has similar characteristics, the portfolio's performance is commendable. To mitigate future drawdowns, consider adding defensive assets or increasing the bond allocation, which could help cushion against market volatility.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with annualized returns averaging 9.80%. The 5th percentile shows a modest 21.8% growth, while the 67th percentile projects a substantial 322.6% increase. These simulations use historical data to model future possibilities but remember they are just one of many tools for forecasting. It's important to note that past performance doesn't guarantee future results. To improve confidence in future projections, consider diversifying further across asset classes and geographies.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset class allocation is predominantly in stocks, with a minor allocation in bonds. This allocation supports growth but may lack the stability that bonds can provide. Compared to typical balanced portfolios, which might have a more even split between stocks and bonds, this portfolio leans heavily towards equities. While this can boost returns during bull markets, it also increases risk during downturns. To align with a balanced risk profile, consider gradually increasing the bond allocation to enhance diversification and reduce potential volatility.

Sectors Info

  • Technology
    21%
  • Health Care
    19%
  • Financials
    11%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sectorally, the portfolio is tech-heavy with 21% in technology, followed by healthcare at 19%. While technology offers growth potential, it can also lead to higher volatility, especially during interest rate hikes. The healthcare sector provides some defensive characteristics, which is beneficial. Compared to common benchmarks, the sector distribution is diverse but concentrated in a few areas. To mitigate sector-specific risks, consider balancing allocations by increasing exposure to underrepresented sectors like utilities or consumer defensive, which typically perform well in uncertain economic times.

Regions Info

  • North America
    75%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with 75% exposure, which is common for U.S.-based investors. This concentration can limit diversification benefits, especially if the U.S. market underperforms. The remaining 25% is spread thinly across Europe, Asia, and other regions. Compared to global benchmarks, this allocation is heavily skewed. Increasing exposure to emerging markets or developed economies outside North America could enhance diversification and potentially capture growth opportunities in other regions.

Market capitalization Info

  • Large-cap
    38%
  • Mega-cap
    31%
  • Mid-cap
    17%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio's market capitalization distribution shows a strong emphasis on large and mega-cap stocks, comprising 69% of the allocation. This focus on larger companies typically implies stability and lower volatility compared to small-cap stocks. However, it may limit growth potential, as smaller companies often experience more dynamic growth. Including a higher proportion of mid and small-cap stocks could enhance diversification and offer higher growth potential, albeit with increased risk. This adjustment could align better with the balanced risk profile intended for the portfolio.

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, a concept that seeks the best possible risk-return ratio given the current assets. This involves adjusting the weightings of existing assets to achieve maximum returns for a given level of risk. While the portfolio is already well-structured, minor tweaks in asset allocation could potentially enhance its efficiency. However, remember that optimization is based solely on historical data and current assets, and does not account for future market changes or new investment opportunities.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Schwab U.S. TIPS ETF 2.90%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.76%

The portfolio offers a moderate total dividend yield of 1.76%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 2.80%. Dividends provide a steady income stream, which is beneficial for reinvestment or income-focused strategies. Compared to a typical growth-focused portfolio, this yield is appealing for those seeking income alongside capital appreciation. To enhance yield, consider increasing exposure to high-dividend sectors or funds. However, be mindful that high yields can sometimes indicate higher risk, so balance with growth-oriented investments.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. TIPS ETF 0.03%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term returns by minimizing costs. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This cost efficiency is a strong point of the portfolio, aligning well with best practices in investment management. To maintain this advantage, regularly review and compare the expense ratios of your holdings against industry averages. If costs rise, consider switching to similar, lower-cost alternatives.

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