This portfolio has only about 10 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.

Balanced Risk with Low Diversity and High S&P 500 Exposure

Report created on Jul 23, 2024

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 solely invested in the Vanguard S&P 500 ETF, representing 100% of the holdings. This means the portfolio is entirely composed of large-cap U.S. stocks, offering broad exposure to the U.S. market. However, the lack of diversification could pose a risk if the U.S. market underperforms. Diversification across different asset classes and geographies can help mitigate such risks. It's essential to consider adding other asset classes to reduce potential volatility and improve risk-adjusted returns.

Growth Info

Historically, the portfolio has shown a strong performance with a compound annual growth rate (CAGR) of 12.97%. However, it also experienced a maximum drawdown of -33.99%, indicating significant volatility during market downturns. This performance suggests that while the portfolio can generate substantial returns, it also carries a high level of risk during market corrections. To balance the potential for high returns with the need for stability, consider incorporating more conservative investments.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, we projected the portfolio's future performance with a hypothetical initial investment. The median outcome (50th percentile) suggests a potential growth of 485.61%. The analysis indicates a high likelihood of positive returns, with 994 out of 1,000 simulations showing gains. This simulation underscores the portfolio's potential for significant growth but also highlights the importance of being prepared for various market scenarios. Diversifying could help smooth out potential volatility.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, making up 99.85% of the holdings, with a minimal allocation to cash at 0.15%. This concentration in equities can drive high returns but also exposes the portfolio to market volatility. Incorporating other asset classes like bonds or real assets can provide a buffer during market downturns. A more balanced allocation would help manage risk and provide more stable returns over time.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

The sector allocation shows a heavy tilt towards Technology (30.60%), followed by Financial Services (12.66%) and Healthcare (12.46%). While these sectors have been strong performers, the concentration in a few sectors increases the risk if these areas underperform. A more diversified sector allocation can help mitigate sector-specific risks. Spreading investments across various sectors can provide a more stable performance and reduce the impact of any single sector's downturn.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly invested in North America (99.43%), with negligible exposure to Europe Developed (0.53%) and Asia Developed (0.04%). This lack of geographic diversification could be a risk if the U.S. market faces prolonged underperformance. Diversifying into international markets can provide exposure to different economic cycles and growth opportunities, reducing the portfolio's dependency on the U.S. market alone.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.30%

The Vanguard S&P 500 ETF provides a dividend yield, contributing to the overall return of the portfolio. However, the focus on capital appreciation means that the portfolio may not generate substantial income for those seeking regular cash flow. For investors looking for a steady income stream, incorporating high-dividend-paying stocks or other income-generating assets can be beneficial. This approach can provide a more balanced mix of income and growth.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are minimal, with a total expense ratio (TER) of just 0.03%. Low costs are a significant advantage as they help maximize net returns over time. Keeping investment costs low is crucial for long-term growth, as high fees can erode returns. Maintaining this cost efficiency while adding diversification is essential. Consider low-cost index funds or ETFs in other asset classes to achieve a well-rounded and cost-effective portfolio.

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