Balanced portfolio with strong global diversification and a tech sector focus

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of equity ETFs, with the Vanguard Total World Stock Index Fund ETF Shares making up 80% and the Invesco NASDAQ 100 ETF accounting for 10%. The remaining 10% is invested in individual stocks, Berkshire Hathaway Inc and JPMorgan Chase & Co. This structure provides a broad exposure to global equities while maintaining a specific focus on large-cap U.S. stocks. A balanced portfolio like this can be beneficial for investors seeking growth with moderate risk. Its composition aligns well with a typical balanced profile, offering diversification across regions and sectors.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.85%. This is a solid performance, especially when considering the maximum drawdown of -26.93%, which indicates the largest observed loss from peak to trough. The portfolio's performance is comparable to broad market benchmarks, suggesting it has captured market upswings effectively. However, it's important to remember that past performance does not guarantee future results. Investors should stay informed about market trends and continue monitoring their portfolio's alignment with their financial goals.

Projection Info

Monte Carlo simulations project potential future outcomes using historical data, offering a glimpse into possible returns. For this portfolio, simulations suggest a median growth of 663.1% over the investment horizon, with a high probability of positive returns. While the annualized return of 17.49% is promising, it's crucial to acknowledge the limitations of these projections. Simulations rely on historical data and assumptions, which may not fully capture future market conditions. Investors should use these projections as a guide, not a guarantee, and remain vigilant about changes in the market landscape.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards equities, with 99% in stocks and a minimal 1% in cash. This allocation is typical for investors seeking capital appreciation over income generation. The high equity exposure offers potential for growth but also increases volatility. A diversified portfolio across multiple asset classes can help mitigate risk and enhance returns. While this portfolio is well-diversified geographically, investors might consider incorporating fixed income or alternative investments to further balance risk and return, especially if nearing retirement or requiring more stability.

Sectors Info

  • Technology
    25%
  • Financials
    24%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio has a significant concentration in the technology sector, accounting for 25% of the total allocation. This is higher than typical benchmarks, indicating a focus on tech-driven growth. While technology has been a strong performer in recent years, it can be volatile, particularly during interest rate hikes or economic downturns. Diversifying into other sectors, like healthcare or consumer staples, could reduce sector-specific risk and provide a more balanced exposure. Investors should assess their comfort with this concentration and adjust accordingly to align with their risk tolerance.

Regions Info

  • North America
    73%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily skewed towards North America, with 73% exposure, followed by Europe Developed at 12%. This allocation reflects a strong focus on developed markets, which have historically offered stability and growth. However, emerging markets, though riskier, can provide opportunities for higher returns and diversification benefits. Investors might consider increasing exposure to regions like Asia or Latin America to capture growth potential and reduce reliance on North American markets. Balancing geographic exposure can enhance portfolio resilience against regional economic fluctuations.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    28%
  • Mid-cap
    16%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is primarily in mega-cap stocks, making up 49%, followed by big caps at 28%. This focus on larger companies offers stability and lower volatility, as these firms often have established market positions and revenue streams. However, small and micro-cap stocks, although riskier, can provide higher growth potential. Including a broader range of market capitalizations can improve diversification and capture different growth dynamics. Investors should evaluate their risk appetite and consider adjusting the balance to optimize growth and stability.

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 current portfolio could be optimized for a better risk-return ratio using the Efficient Frontier, which identifies the best possible balance between risk and return. While the current expected return is lower than the optimal portfolio's 20.62%, achieving this involves higher risk. Investors should weigh the benefits of potentially higher returns against increased volatility. Optimization strategies might include adjusting asset weights or incorporating different asset classes. It's essential to regularly review the portfolio's efficiency to ensure it aligns with changing market conditions and personal risk tolerance.

Dividends Info

  • JPMorgan Chase & Co 1.70%
  • Invesco NASDAQ 100 ETF 0.70%
  • Vanguard Total World Stock Index Fund ETF Shares 2.20%
  • Weighted yield (per year) 1.92%

The portfolio's dividend yield is 1.92%, with the Vanguard Total World Stock Index Fund ETF Shares contributing the highest yield at 2.20%. Dividends can provide a steady income stream, which is particularly valuable during volatile markets. While the focus here is on growth, maintaining a balance between growth and income can be beneficial. Investors seeking more income might consider increasing exposure to high-dividend stocks or dividend-focused funds. However, it's essential to evaluate the trade-off between income and growth potential, ensuring alignment with overall investment goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the cost-efficient Vanguard Total World Stock Index Fund ETF Shares. Low costs are advantageous, as they enhance long-term returns by minimizing the drag on performance. While the Invesco NASDAQ 100 ETF has a slightly higher TER of 0.15%, the overall cost structure remains competitive. Maintaining low costs is crucial for maximizing net returns, especially over extended investment horizons. Investors should continue monitoring expense ratios and consider cost-effective alternatives when rebalancing or adjusting the portfolio.

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