A balanced portfolio with high US equity concentration and moderate risk exposure

Report created on Dec 31, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio consists of three ETFs, each holding about one-third of the total allocation. These ETFs focus on U.S. equities, with a slight emphasis on dividend-paying stocks. This composition is typical for a balanced portfolio but lacks diversification across asset classes. A more diversified portfolio might include bonds or international equities to reduce risk. Consider adding different asset classes to achieve a more balanced risk-return profile, especially if the goal is to manage volatility.

Growth Info

Historically, the portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 14.76%. This indicates robust growth compared to typical benchmarks. However, the max drawdown of -24.25% suggests vulnerability during market downturns. While past performance can be encouraging, it does not guarantee future results. You might want to prepare for potential downturns by considering more defensive assets that could help cushion the blow during market volatility.

Projection Info

Using Monte Carlo simulations, the portfolio's future shows a wide range of outcomes. With 1,000 simulations, the median outcome is a 586.48% increase. This method uses historical data to predict potential returns, highlighting uncertainty. Although 995 simulations ended positively, remember that these projections are not guarantees. To mitigate risks, consider periodically re-evaluating your asset allocation and remain flexible to adjust based on changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, accounting for nearly 100% of the allocation. This concentration can lead to higher volatility, especially during market corrections. A balanced portfolio typically includes a mix of stocks and bonds to manage risk better. Consider diversifying into other asset classes such as bonds or real estate to reduce volatility and improve the portfolio's resilience against market fluctuations, aligning with a balanced risk profile.

Sectors Info

  • Technology
    31%
  • Consumer Discretionary
    12%
  • Financials
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Consumer Staples
    8%
  • Industrials
    7%
  • Energy
    6%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector-wise, the portfolio leans heavily towards technology, with over 31% allocation, followed by consumer cyclicals and financial services. This concentration in tech can lead to high volatility, especially during economic shifts or interest rate changes. A more balanced sector allocation could reduce risk. Consider diversifying into underrepresented sectors like utilities or real estate, which might offer stability and steady returns, especially during economic downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is almost entirely focused on North America, with over 98% allocation. This lack of international exposure limits diversification and increases vulnerability to regional economic downturns. Global diversification can help mitigate risks associated with regional economic shifts. Consider increasing allocations to international markets, which might provide growth opportunities and reduce dependence on the U.S. economy, aligning with a balanced investment strategy.

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 may benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the current assets' allocation to enhance returns for the given level of risk. Optimization focuses on maximizing efficiency, not necessarily diversification. Regularly reviewing and optimizing your portfolio can help ensure it remains aligned with your risk tolerance and investment goals, potentially improving overall performance.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.85%

The portfolio's dividend yield stands at 1.85%, primarily driven by the Schwab U.S. Dividend Equity ETF. Dividends can provide a steady income stream, which is beneficial for investors seeking regular cash flow. However, the focus on dividends should not overshadow the need for growth. Ensure that the portfolio maintains a balance between income generation and capital appreciation, especially if the investment goal includes long-term wealth accumulation.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is impressively low and supports better long-term performance by minimizing costs. Low fees are crucial as they compound over time, enhancing net returns. Maintaining low costs is a strength of this portfolio, but continue to monitor for any changes in fees or potential lower-cost alternatives. This ensures that your portfolio remains cost-effective, maximizing your investment returns over time.

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