A balanced, diversified portfolio with a strong focus on US equities and dividend income

Report created on Dec 16, 2024

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 predominantly of ETFs, with a significant allocation to the Vanguard Total Stock Market Index Fund ETF, which accounts for over half of the portfolio. This is complemented by allocations to dividend-focused ETFs, such as the Invesco S&P 500 High Dividend Low Volatility ETF and the Schwab U.S. Dividend Equity ETF. Additionally, there is exposure to both developed and emerging markets through Vanguard's FTSE ETFs. This composition suggests a strategy focused on broad market exposure and income generation through dividends. A well-balanced mix of growth and income-oriented assets can cater to investors seeking moderate growth with some income stability.

Growth Info

Historically, the portfolio has demonstrated a compound annual growth rate (CAGR) of 11.14%, which indicates robust performance over time. However, it also experienced a maximum drawdown of -35.12%, highlighting potential volatility. This pattern suggests that while the portfolio has the potential for strong returns, it is not immune to market downturns. Understanding the historical performance helps investors gauge the risk-return profile and set realistic expectations for future returns. Diversifying further or implementing risk management strategies could help mitigate the impact of similar drawdowns in the future.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, have been conducted with 1,000 simulations. These projections show a median growth of 225.13% and a positive return in 948 of the simulations. This suggests a high likelihood of positive outcomes, with an average annualized return of 10.38%. However, it's important to remember that these simulations are based on historical data, which may not fully capture future market conditions. Investors should use these projections as one of several tools in decision-making, considering both optimistic and pessimistic scenarios.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of its allocation, with negligible amounts in cash and other asset classes. This concentration in equities suggests a focus on capital appreciation, but it also exposes the portfolio to equity market volatility. While this aligns with a growth-oriented strategy, introducing other asset classes such as bonds or real estate could enhance diversification and potentially reduce volatility. A more balanced asset allocation might better align with investors seeking to manage risk while pursuing growth opportunities.

Sectors Info

  • Technology
    21%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Consumer Staples
    8%
  • Telecommunications
    8%
  • Energy
    6%
  • Utilities
    6%
  • Real Estate
    5%
  • Basic Materials
    4%

Sector allocation is diversified, with the largest exposure to technology, financial services, and healthcare. This distribution reflects a mix of growth and defensive sectors, offering potential for both appreciation and stability. However, the high concentration in technology could increase vulnerability to sector-specific downturns. Balancing exposure across sectors can help mitigate sector-specific risks and enhance overall portfolio resilience. Investors might consider adjusting sector allocations periodically to align with evolving market conditions and personal investment goals.

Regions Info

  • North America
    75%
  • Asia Emerging
    8%
  • Europe Developed
    7%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North American markets, with over 75% exposure. While this provides stability and familiarity, it may limit exposure to growth opportunities in other regions. Emerging markets in Asia and Latin America offer potential for higher returns but come with increased risk. A more geographically diversified portfolio can reduce region-specific risks and tap into global growth trends. Investors should consider their appetite for international exposure and adjust allocations to align with their risk tolerance and return expectations.

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 potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the allocation among current assets, investors might achieve a more efficient portfolio without necessarily adding new assets. This involves analyzing the expected returns and volatility of each asset and rebalancing to improve the overall risk-return profile. While optimization can enhance performance, it is important to consider transaction costs and tax implications. Regular reviews and adjustments can help maintain an optimal balance aligned with investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.50%
  • Invesco S&P 500® High Dividend Low Volatility ETF 3.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 2.11%

The portfolio's dividend yield stands at 2.11%, with notable contributions from the Schwab U.S. Dividend Equity ETF and the Invesco S&P 500 High Dividend Low Volatility ETF. Dividends provide a steady income stream, which can be especially appealing during periods of market volatility. Reinvesting dividends can compound returns over time, enhancing long-term growth. Investors focused on income may consider increasing allocations to high-yielding assets, while those seeking growth might prioritize reinvestment strategies. Balancing dividend income with growth potential is key to achieving financial goals.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Invesco S&P 500® High Dividend Low Volatility ETF 0.30%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, indicating low costs relative to many actively managed portfolios. Lower costs can significantly enhance long-term returns, as fees compound over time. The minimal expense ratio suggests that the portfolio is cost-efficient, aligning with a passive investment strategy. Continuously monitoring and minimizing investment costs is crucial for maximizing net returns. Investors should remain vigilant about expense ratios and consider cost-effective alternatives if necessary, ensuring that fees do not erode potential gains.

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