A balanced portfolio with a focus on US equities and low geographic diversification

Report created on Feb 5, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equity ETFs, with 45% in the Vanguard Value Index Fund, 40% in the Schwab U.S. Large-Cap Growth ETF, and 15% in the Vanguard Small-Cap Value Index Fund. This composition leans heavily towards large-cap US stocks, aligning with a balanced risk profile. While this structure supports growth, the lack of asset class diversity could increase vulnerability to market volatility. Consider incorporating other asset classes, like bonds, to enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has performed strongly with a Compound Annual Growth Rate (CAGR) of 13.91%. This suggests that the portfolio has been well-positioned to capitalize on market upswings. However, the maximum drawdown of -35.56% indicates significant risk during downturns. Comparing this to a benchmark, the performance is impressive but highlights the need for risk management strategies. To mitigate future drawdowns, consider diversifying across asset classes or geographic regions.

Projection Info

Using Monte Carlo simulations, which estimate future performance based on historical data, the portfolio shows promising potential. With a 50th percentile end value of 435.3% and 985 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, the 5th percentile projection at 38.5% underscores the inherent uncertainty. Remember, these projections rely on historical trends and are not guaranteed. Regularly reviewing and adjusting the portfolio can help navigate market changes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, lacking exposure to other asset classes like bonds or real estate. This singular focus on equities can lead to higher volatility and risk, especially during market downturns. Diversification across multiple asset classes typically provides a buffer against market fluctuations. Consider adding fixed income or alternative investments to balance risk and improve the portfolio's resilience against economic shifts.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Health Care
    12%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    3%
  • Basic Materials
    2%

The sector allocation reveals a significant concentration in technology (26%), followed by financial services (16%) and healthcare (12%). While these sectors have driven growth, they can also be volatile, especially technology during interest rate hikes. This concentration might expose the portfolio to sector-specific risks. Aligning sector exposure with broader market benchmarks can help manage risk. Consider redistributing some investments into underrepresented sectors for more balanced exposure.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is overwhelmingly concentrated in North America (99%), with minimal exposure to other regions. This geographic concentration limits diversification and increases susceptibility to region-specific economic changes. Global diversification can reduce risk and enhance returns by capitalizing on growth in different markets. Consider expanding exposure to international markets, including emerging economies, to achieve a more balanced geographic distribution.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    31%
  • Mid-cap
    22%
  • Small-cap
    9%
  • Micro-cap
    2%

The portfolio is diversified across market capitalizations, with a focus on mega (36%) and big caps (31%). This allocation provides stability and growth potential, as large-cap stocks are typically more resilient. However, the limited exposure to small and micro-cap stocks may restrict growth opportunities. Including a broader range of market caps could enhance diversification and capture potential gains from smaller, high-growth companies.

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 has potential for optimization using the Efficient Frontier, which assesses the best possible risk-return ratio based on current assets. While the current allocation is aligned with growth goals, exploring different combinations could improve risk-adjusted returns. Adjusting the weightings of existing assets or incorporating new ones may enhance efficiency. Regularly reviewing the portfolio against the Efficient Frontier can help ensure it remains optimized for current market conditions.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.40%
  • Vanguard Value Index Fund ETF Shares 2.20%
  • Weighted yield (per year) 1.36%

The portfolio's overall dividend yield is 1.36%, with contributions from each ETF. Dividends provide a steady income stream, which is beneficial for income-focused investors. However, the yield is relatively low compared to income-oriented portfolios. If generating income is a priority, consider increasing exposure to higher-yielding investments. Balancing growth and income can provide a more stable return profile, especially in volatile markets.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.04%. This cost efficiency supports better long-term performance by minimizing fees that can erode returns over time. Keeping costs low is a key advantage, as it allows more of the investment returns to compound. Maintaining this low-cost structure while exploring additional diversification opportunities can enhance the portfolio's overall effectiveness.

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