A cautious portfolio with balanced asset allocation and moderate international diversification

Report created on Jan 19, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of ETFs and individual stocks, with a focus on large-cap equities and bonds. Notably, the largest allocations are in bond ETFs, making up nearly 30% of the portfolio. This composition aligns with a cautious risk profile, which typically emphasizes stability and income over aggressive growth. A balanced approach like this can help mitigate volatility, especially during market downturns. To enhance diversification, consider adding more exposure to underrepresented asset classes or sectors, which could further stabilize returns over time.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 12.5%. This is a solid return, especially for a cautious profile, indicating effective asset selection and management. Compared to benchmarks, the portfolio's maximum drawdown of -22.34% is moderate, reflecting its risk-averse nature. While past performance is not indicative of future results, maintaining a similar asset allocation could continue to yield comparable returns. Regularly reviewing the portfolio's performance against personal benchmarks can ensure it remains aligned with financial goals.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows promising results for the portfolio. With 1,000 simulations, the median projected return is 416.01%, suggesting potential for strong growth. However, it's important to note that these projections are based on past market conditions and may not account for future uncertainties. While the portfolio shows a high likelihood of positive returns, it’s advisable to periodically reassess and adjust the asset mix to adapt to changing market dynamics and personal investment goals.

Asset classes Info

  • Stocks
    63%
  • Bonds
    30%
  • Real Estate
    6%
  • Other
    1%

The portfolio is predominantly invested in stocks (62.87%) and bonds (29.78%), with smaller allocations in real estate and other asset classes. This allocation provides a good balance between growth potential and income stability, typical of a cautious investment strategy. Compared to common benchmarks, the portfolio's bond allocation is relatively high, which can help cushion against stock market volatility. To enhance diversification, consider gradually increasing exposure to alternative asset classes, which may offer additional growth opportunities and risk mitigation.

Sectors Info

  • Financials
    16%
  • Technology
    12%
  • Consumer Staples
    8%
  • Real Estate
    7%
  • Industrials
    6%
  • Consumer Discretionary
    6%
  • Health Care
    5%
  • Energy
    4%
  • Telecommunications
    3%
  • Basic Materials
    2%
  • Utilities
    1%

Sector-wise, the portfolio has significant exposure to financial services and technology, comprising over 27% collectively. This concentration can be beneficial if these sectors perform well but may introduce volatility if they face downturns. Compared to benchmarks, the allocation is moderately diversified, though some sectors like utilities and basic materials are underrepresented. To reduce sector-specific risks, consider reallocating some investments towards these lesser-represented sectors, which could offer defensive qualities and balance the overall portfolio risk.

Regions Info

  • North America
    60%
  • Europe Developed
    5%
  • Japan
    2%
  • Australasia
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily weighted towards North America, with 59.64% exposure. This aligns with many U.S.-based investors' preferences but limits international diversification. Compared to benchmarks, there is minimal exposure to emerging markets, which could offer higher growth potential. To improve geographic diversification, consider increasing allocations to regions like Asia and Latin America. This could help mitigate regional economic risks and capitalize on global growth opportunities, aligning the portfolio more closely with global market dynamics.

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 risk-return profile can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, the portfolio's expected return is below the optimal level of 2.80% at the same risk. By adjusting asset allocations within the existing holdings, the portfolio could achieve a more efficient balance without increasing risk. This involves reallocating towards assets with higher expected returns or lower risk, potentially enhancing overall performance while maintaining the cautious risk classification.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Bank of America Corp 2.10%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Costco Wholesale Corp 0.50%
  • iShares U.S. Treasury Bond ETF 3.20%
  • iShares MBS ETF 3.30%
  • Schwab International Equity ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. REIT ETF 3.20%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Energy Select Sector SPDR® Fund 3.10%
  • Consumer Staples Select Sector SPDR® Fund 2.00%
  • Health Care Select Sector SPDR® Fund 1.20%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 1.93%

The portfolio's dividend yield is 1.93%, with notable contributions from bond ETFs and select equities like Bank of America Corp. Dividends provide a steady income stream, which is advantageous for a cautious investor seeking regular returns. Compared to typical income-focused portfolios, this yield is moderate, reflecting the balanced nature of the portfolio. To enhance income, consider increasing allocations to high-dividend-paying sectors or assets. This could improve cash flow and support reinvestment strategies, boosting long-term portfolio growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR Gold MiniShares 0.10%
  • iShares U.S. Treasury Bond ETF 0.05%
  • iShares MBS ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. REIT ETF 0.07%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Energy Select Sector SPDR® Fund 0.09%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Health Care Select Sector SPDR® Fund 0.09%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Compared to industry averages, these costs are well-managed, reflecting a focus on low-cost investment options like ETFs. Maintaining low costs is crucial for maximizing net returns, so continue to monitor and compare expense ratios. Consider replacing higher-fee assets with more cost-effective alternatives if they align with your investment strategy.

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