Balanced and broadly diversified portfolio with a focus on technology and dividend-yielding stocks

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 a balanced approach to growth and income, with a moderate risk tolerance and a long-term investment horizon. It's designed for individuals who appreciate the growth potential of the stock market but also value the stability and income generation of dividend-paying stocks. This type of investor is likely comfortable with market fluctuations and understands the importance of global diversification to mitigate risk.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    60.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    30.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%

This portfolio is structured around three ETFs, emphasizing a broad diversification across global equities with a significant tilt towards the US market. The majority allocation in the Vanguard Total Stock Market Index Fund ETF Shares signifies a strong preference for comprehensive exposure to the US stock market, while the Vanguard Total International Stock Index Fund ETF Shares provide a substantial international component. The inclusion of the Schwab U.S. Dividend Equity ETF, although smaller, introduces a focused income-generating strategy through dividend-paying stocks. This composition suggests a balanced approach, aiming to capture growth through broad market exposure while seeking income through dividends.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 12.82%, with a notable maximum drawdown of -34.35%. These figures indicate a resilient performance across various market conditions, balancing growth with reasonable risk management. The performance is especially commendable considering the significant drawdown, which underscores the portfolio's ability to recover and generate substantial returns over time. This historical performance, while promising, should be viewed with the understanding that past results do not guarantee future outcomes.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential performances for this portfolio. With 991 out of 1,000 simulations showing positive returns, the projections are broadly optimistic. However, the significant spread between the 5th and 67th percentiles highlights the uncertainty inherent in these projections. This underscores the importance of maintaining a long-term perspective and being prepared for volatility.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's almost exclusive allocation to stocks, with a minimal cash holding, positions it for growth but also exposes it to market volatility. This asset class distribution aligns with the portfolio's balanced profile but leans towards a higher risk and return potential. Diversification across asset classes could be enhanced by incorporating bonds or alternative investments, which may offer risk mitigation benefits during stock market downturns.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sectoral allocation reveals a strong inclination towards technology, financial services, and industrials, which are sectors typically associated with growth. However, this concentration also subjects the portfolio to sector-specific risks, such as regulatory changes or economic shifts affecting these industries. A more balanced sector distribution could help mitigate these risks, potentially smoothing the portfolio's performance across different market cycles.

Regions Info

  • North America
    72%
  • Europe Developed
    11%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

With 72% of assets allocated to North America and a diversified but smaller allocation to international markets, the portfolio is well-positioned to capture growth in developed markets while maintaining some exposure to emerging markets. This geographic distribution supports global diversification but with a clear bias towards the US. Investors might consider increasing exposure to emerging markets or underrepresented regions for enhanced diversification and potential growth opportunities.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    33%
  • Mid-cap
    20%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's emphasis on mega and big-cap stocks, constituting 71% of the allocation, suggests a focus on stability and lower volatility associated with larger, established companies. However, the presence of medium, small, and micro-cap stocks, although in smaller proportions, introduces growth potential and diversification benefits. This market capitalization mix balances the pursuit of growth with a degree of risk mitigation.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.85%

The dividend yields from the Schwab U.S. Dividend Equity ETF significantly enhance the portfolio's income generation, contributing to its overall return. This focus on dividend-yielding stocks is a strategic choice that provides a steady income stream, which can be particularly beneficial during market volatility. However, investors should balance the pursuit of high dividends with the growth potential of non-dividend-paying stocks.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

With an average Total Expense Ratio (TER) of 0.04%, the portfolio benefits from low costs, supporting better long-term performance. This cost efficiency is crucial for maximizing net returns, especially in a low-interest-rate environment where every basis point counts. Investors should continue monitoring costs, as even small reductions can compound significantly over time.

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.

Using the Efficient Frontier framework, this portfolio appears well-positioned near the optimal risk-return ratio, suggesting that its current allocation efficiently balances expected returns against volatility. However, continuous review and potential adjustments are essential to maintain this optimization, especially as market conditions and investment goals evolve.

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