A balanced portfolio with strong US focus and moderate risk suitable for growth-oriented investors

Report created on Dec 6, 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 of four Exchange-Traded Funds (ETFs), with a significant emphasis on U.S. equities. The Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares each account for 30% of the portfolio, while the Invesco QQQ Trust and the Vanguard Total International Stock Index Fund ETF Shares make up 20% each. This allocation reflects a balanced approach, combining broad market exposure with an emphasis on large-cap U.S. stocks. A well-diversified portfolio can help mitigate risk by spreading investments across various assets. Consider reviewing the allocation periodically to ensure it aligns with your evolving financial goals.

Growth Info

Historically, this portfolio has demonstrated a commendable compound annual growth rate (CAGR) of 13.65%, albeit with a maximum drawdown of -32.62%. This indicates that while the portfolio has achieved substantial growth, it has also experienced significant downturns. Understanding past performance can provide insights into potential future behavior, but it's crucial to remember that historical data does not guarantee future results. Consider maintaining a diversified approach to manage potential volatility and drawdowns effectively.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of possible portfolio values. With a 50th percentile projection of 451.02% and an annualized return of 14.55%, the outlook appears positive. However, the inherent limitation of such simulations is their reliance on past data, which may not account for future market conditions. To navigate uncertainty, regularly review and adjust your investment strategy as new information becomes available.

Asset classes Info

  • Stocks
    100%

This portfolio is heavily weighted towards stocks, with 99.59% of its assets in equities. Such a concentration can offer higher growth potential but also increases exposure to market volatility. Diversifying across multiple asset classes, such as bonds or real estate, can help stabilize returns by offsetting stock market fluctuations. Consider exploring additional asset classes that align with your risk tolerance and investment goals to enhance diversification.

Sectors Info

  • Technology
    32%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is skewed towards technology, which constitutes approximately 32% of the holdings. While this sector has driven significant growth in recent years, it also introduces sector-specific risks. Balancing exposure across various sectors, such as healthcare or consumer goods, can mitigate the impact of sector volatility. Regularly assess sector allocations to ensure they reflect your risk tolerance and market outlook.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

This portfolio predominantly invests in North American assets, with 80.75% exposure, limiting its geographic diversification. While North American markets have performed well historically, incorporating investments from other regions can reduce region-specific risks. Consider increasing exposure to emerging markets or other developed regions to enhance diversification and capture potential growth opportunities outside the U.S.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares. High correlation means these assets tend to move in tandem, offering limited diversification benefits. To enhance risk management, consider replacing one of these ETFs with an asset that has a lower correlation, thereby improving the overall diversification and resilience of 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.

Optimizing this portfolio using the Efficient Frontier involves adjusting asset allocations to achieve the best possible risk-return ratio. The current portfolio could benefit from reducing overlap in highly correlated assets, which do not contribute to diversification. By reallocating funds towards less correlated assets, you can potentially enhance portfolio efficiency, achieving a more favorable balance between risk and return.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.42%

The portfolio's dividend yield stands at 1.42%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the most at 2.9%. Dividends provide a steady income stream and can contribute to total returns, especially in volatile markets. To potentially increase income, consider reallocating some assets towards higher-yielding investments, while ensuring the overall portfolio risk remains aligned with your investment objectives.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The total expense ratio (TER) for this portfolio is 0.07%, which is relatively low. Keeping costs in check is crucial, as high fees can erode returns over time. Low-cost ETFs like those in this portfolio are advantageous for maintaining cost efficiency. Continuously monitor expense ratios and seek opportunities to reduce costs further, such as opting for no-fee funds or negotiating lower fees with your broker.

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