A balanced portfolio centered on US equities with a strong dividend focus

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor looking for growth through US equities with a balanced risk appetite. It's designed for those who value income generation alongside capital appreciation, making it ideal for medium to long-term horizons. The investor likely has a moderate tolerance for market volatility, comfortable with the fluctuations associated with a stock-focused strategy but seeking to mitigate this through dividends and some level of international diversification.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    49.86%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    39.48%
  • iShares Core MSCI Total International Stock ETF
    IXUS - US46432F8344
    10.67%

This portfolio prominently features US equity exposure, with nearly 90% allocated to two major ETFs: the iShares Core S&P 500 ETF and the Schwab U.S. Dividend Equity ETF. The remaining portion is dedicated to international stocks via the iShares Core MSCI Total International Stock ETF. This composition reflects a balanced approach, leveraging the stability and growth potential of large-cap US equities while incorporating a modest international presence for diversification. The heavy emphasis on dividend-yielding assets suggests a strategy aimed at generating income alongside capital appreciation.

Growth Info

The portfolio has demonstrated robust historical performance, with a Compound Annual Growth Rate (CAGR) of 13.22%. This performance, however, came with a significant drawdown of -33.59%, indicating periods of high volatility. The concentration in high-performing sectors like technology, which is prone to rapid price changes, likely contributed to this volatility. Despite this, the strategy of focusing on dividend-yielding equities has provided a stable income stream, evidenced by a total dividend yield of 2.40%.

Projection Info

Monte Carlo simulations, which use historical data to forecast a range of possible future outcomes, suggest a median annualized return of 12.85% for this portfolio. While simulations show a wide range of outcomes, with a significant majority of scenarios returning positive results, it's important to remember that these projections are based on past performance, which is not a reliable indicator of future results. Investors should consider this uncertainty and the portfolio's past volatility when making future investment decisions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is entirely composed of stocks, indicating a singular focus on equity investments. This lack of asset class diversification can expose the portfolio to higher volatility, as equities are generally more susceptible to market fluctuations than bonds or other asset classes. While this approach aligns with a balanced to moderately aggressive investment strategy, incorporating fixed-income securities or alternative investments could provide additional stability during market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    12%
  • Health Care
    12%
  • Consumer Staples
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Energy
    9%
  • Telecommunications
    8%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation is broadly diversified across technology, financial services, healthcare, and consumer sectors, among others. This diversification helps mitigate sector-specific risks, but the heavy weighting in technology (23%) could expose the portfolio to higher volatility, given the sector's rapid growth and price fluctuations. Balancing sector exposure by reallocating some investments from technology to underrepresented sectors like utilities or real estate may reduce volatility while still targeting growth.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    0%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

With 90% of assets allocated to North America, primarily the United States, the portfolio exhibits a strong home bias. While this concentration has likely benefited from the robust performance of the US market, it also increases vulnerability to regional economic fluctuations. Expanding international exposure beyond the current 10.67% could enhance global diversification, potentially reducing risk and capturing growth in emerging and developed markets outside the US.

Market capitalization Info

  • Large-cap
    43%
  • Mega-cap
    28%
  • Mid-cap
    24%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's allocation across market capitalizations is well-diversified, with a mix of big (43%), mega (28%), and medium (24%) cap stocks. This distribution supports a balanced risk-return profile, leveraging the stability of large-cap companies while capturing the growth potential of medium-cap firms. However, the relatively small allocation to small (3%) and micro (1%) caps limits exposure to higher-growth, albeit riskier, segments of the market.

Dividends Info

  • iShares Core S&P 500 ETF 1.20%
  • iShares Core MSCI Total International Stock ETF 2.80%
  • Schwab U.S. Dividend Equity ETF 3.80%
  • Weighted yield (per year) 2.40%

The focus on dividend-yielding ETFs has created a significant income stream, with a total portfolio yield of 2.40%. This approach not only provides regular income but also contributes to the portfolio's total return, offering a cushion against market volatility. Investors should continue monitoring dividend yields and consider the sustainability of these payouts, especially in sectors where dividends might be more vulnerable to economic downturns.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • iShares Core MSCI Total International Stock ETF 0.07%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from low overall costs, with a total expense ratio (TER) of 0.05%. This efficiency is crucial for long-term growth, as lower costs directly translate to higher net returns for investors. The selection of low-cost ETFs demonstrates a strategic approach to minimizing expenses while maintaining broad market exposure, a practice that should be continued to ensure cost-effective portfolio management.

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.

Analyzing the portfolio through the lens of the Efficient Frontier suggests there may be opportunities to optimize the risk-return profile by adjusting asset allocations. While the current setup is solid, fine-tuning the balance between US and international equities, as well as diversifying across more asset classes, could potentially offer a better trade-off between risk and return. However, any adjustments should be made in the context of the investor's risk tolerance and investment goals.

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