A balanced portfolio with a strong focus on US equities and a hedge in gold
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 with a balanced risk tolerance, seeking growth through a significant allocation to US equities while using gold as a hedge against market volatility. It's tailored for individuals comfortable with moderate market fluctuations and a focus on long-term capital appreciation. The investor likely has a medium to long investment horizon, allowing them to weather short-term market movements in pursuit of sustained growth.
Positions
-
Vanguard S&P 500 ETF
VOO - US9229083632 75.00% -
iShares® Gold Trust Micro
IAUM - US46436F1030 25.00%
The portfolio is predominantly invested in the Vanguard S&P 500 ETF, making up 75% of the allocation, with the remaining 25% in the iShares® Gold Trust Micro. This structure emphasizes a heavy tilt towards US equities, represented by the S&P 500, while utilizing gold as a hedge against market volatility. The division between a broad market index and a commodity ETF presents a straightforward approach to diversification, albeit with a limited scope given the concentration in only two asset types.
Growth
Historically, the portfolio has exhibited a Compound Annual Growth Rate (CAGR) of 14.72%, with a maximum drawdown of -20.84%. These figures suggest a resilient performance, particularly noting the relatively high CAGR, which indicates strong growth over time. However, the significant drawdown highlights periods of substantial value decline, a common risk in portfolios with heavy stock concentration. The days contributing to 90% of returns being limited to 23 indicates that a small number of high-performing days drive most of the portfolio's gains.
Projection
Forward projections, based on Monte Carlo simulations, suggest a wide range of potential outcomes, from a 225.2% increase on the lower end to an 846.6% median increase, showcasing the portfolio's growth potential. However, these projections, while informative, rely on historical data and cannot guarantee future performance. They serve as a useful tool for understanding potential volatility and outcomes but should be interpreted with caution.
Asset classes
- Stocks 75%
- Cash 0%
The portfolio's asset class distribution, with 75% in stocks and 25% in commodities (gold), indicates a moderate to aggressive risk profile, given the volatility associated with equities and commodities. This allocation aligns with the portfolio's balanced risk classification but suggests room for increased diversification across more asset classes to mitigate risk further and potentially enhance returns.
Sectors
- Technology 27%
- Financials 10%
- Consumer Discretionary 8%
- Telecommunications 7%
- Health Care 7%
- Industrials 6%
- Consumer Staples 4%
- Energy 2%
- Utilities 2%
- Real Estate 1%
- Basic Materials 1%
Sectoral allocation within the S&P 500 ETF portion is well-diversified across technology, financial services, and consumer cyclicals, among others. The heavy weighting towards technology (27%) reflects the sector's significant presence in the broader market index and its role in driving growth. However, this concentration also introduces sector-specific risks, including sensitivity to interest rate changes and market cycles.
Regions
- North America 75%
- Europe Developed 0%
Geographically, the portfolio is heavily concentrated in North America (75%), specifically the United States, due to its investment in the S&P 500 ETF. This focus on a single region increases exposure to country-specific economic and political risks. Expanding geographic exposure could enhance diversification and potentially reduce volatility.
Market capitalization
- Mega-cap 35%
- Large-cap 25%
- Mid-cap 13%
- Small-cap 1%
The market capitalization breakdown shows a preference for mega (35%) and big (25%) cap stocks, typical of S&P 500 constituents. This bias towards larger companies may offer stability and lower volatility compared to smaller caps but could also limit growth potential and diversification benefits provided by smaller, more agile companies.
Dividends
- Vanguard S&P 500 ETF 1.10%
- Weighted yield (per year) 0.82%
The portfolio's dividend yield, primarily from the Vanguard S&P 500 ETF, contributes to its total return, offering a modest income component on top of capital appreciation. While the overall yield is moderate, it enhances the portfolio's attractiveness for investors seeking both growth and income.
Ongoing product costs
- iShares® Gold Trust Micro 0.09%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.04%
The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.04%, underscoring the efficiency of investing in low-cost ETFs. Reducing investment costs is crucial for enhancing long-term returns, and this portfolio exemplifies cost-effective asset 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.
Optimization analysis suggests that the portfolio could achieve a slightly higher expected return of 18.26% at the same risk level. This indicates that while the current allocation has performed well, there may be opportunities to fine-tune the asset mix to further align with the Efficient Frontier, optimizing the risk-return profile without increasing volatility.
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