Balanced portfolio with a strong foundation in S&P 500 and diversification into small-cap value and short-term bonds

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 seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to large-cap equities, complemented by strategic positions in small-cap value stocks for growth potential and short-term bonds for stability. Ideal for individuals looking to build wealth over time with a measured approach to risk.

Positions

  • SPDR® Portfolio S&P 500 ETF
    SPLG - US78464A8541
    56.00%
  • iShares® 0-3 Month Treasury Bond ETF
    SGOV - US46436E7186
    20.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    16.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    8.00%

This portfolio is anchored by a significant allocation to the SPDR® Portfolio S&P 500 ETF, comprising 56% of the total, which suggests a strong foundation in large-cap U.S. equities. The inclusion of the iShares® 0-3 Month Treasury Bond ETF at 20% provides liquidity and reduces volatility, acting as a buffer against market downturns. The Avantis® U.S. Small Cap Value ETF and Avantis® International Small Cap Value ETF, at 16% and 8% respectively, introduce growth potential and international exposure, enhancing diversification. The overall composition reflects a balanced approach, combining growth prospects with risk management.

Growth Info

Historically, this portfolio has demonstrated robust performance with a Compound Annual Growth Rate (CAGR) of 15.48%. The maximum drawdown of -20.06% indicates resilience during market volatility, a crucial factor for balanced portfolios. The days contributing to 90% of returns highlight the impact of significant market movements on performance. Compared to a balanced benchmark, this portfolio's historical performance suggests effective asset allocation and risk management strategies.

Projection Info

Monte Carlo simulations, which forecast potential outcomes based on historical data, show a wide range of future performance scenarios for this portfolio. With 997 out of 1,000 simulations yielding positive returns, the portfolio demonstrates a high probability of future gains. However, it's important to note that these simulations are based on past data and cannot guarantee future results. The projected median increase of 608.8% is optimistic, indicating potential for substantial growth while acknowledging the inherent uncertainties in market behavior.

Asset classes Info

  • Stocks
    80%
  • Cash
    20%
  • Bonds
    0%
  • Other
    0%

The portfolio's asset allocation consists of 80% in stocks and 20% in cash equivalents, with no direct investments in bonds beyond the short-term Treasury ETF. This allocation supports a balanced risk-return profile, offering growth potential through equities while maintaining liquidity and stability through cash equivalents. Adjusting this mix could further align the portfolio with the investor's risk tolerance and investment horizon.

Sectors Info

  • Technology
    22%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    6%
  • Health Care
    6%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    1%
  • Real Estate
    1%

The sectoral distribution is well-diversified across technology, financial services, consumer cyclicals, and industrials, among others. This diversification helps mitigate sector-specific risks and capitalizes on growth opportunities across the economy. However, the heavy weighting in technology may expose the portfolio to sector-specific volatility. Balancing sector exposures can enhance resilience against market fluctuations.

Regions Info

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

Geographically, the portfolio is heavily weighted towards North America (72%), with minimal exposure to developed and emerging markets outside of this region. This concentration enhances exposure to the U.S. economy's growth potential but limits global diversification. Increasing allocations to developed and emerging markets could provide broader exposure to global growth trends and reduce geographic risk.

Market capitalization Info

  • Mega-cap
    26%
  • Large-cap
    19%
  • Mid-cap
    14%
  • Small-cap
    11%
  • Micro-cap
    8%

The market capitalization exposure spans mega to micro-caps, with a focus on larger companies. This diversified cap-size allocation supports a balance between stability offered by large-cap stocks and growth potential from small and micro-cap investments. Adjusting the balance between these can fine-tune the portfolio's risk and return characteristics.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.40%
  • Avantis® U.S. Small Cap Value ETF 1.70%
  • iShares® 0-3 Month Treasury Bond ETF 3.90%
  • SPDR® Portfolio S&P 500 ETF 1.10%
  • Weighted yield (per year) 1.94%

The portfolio's total yield of 1.94% indicates a moderate contribution from dividends to overall returns. This yield, combined with growth from equity positions, supports a balanced approach to income and capital appreciation. For investors seeking higher income, reallocating towards assets with higher dividend yields could be considered.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) of 0.09% is impressively low, maximizing the potential for net returns. This cost efficiency is crucial for long-term investment strategies, as lower costs compound favorably over time. Maintaining focus on cost-effective investments will continue to support the portfolio's performance.

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.

The current allocation suggests a balanced approach on the Efficient Frontier, aiming for an optimal risk-return ratio. However, continuous review and adjustment of asset allocation are essential to maintain this balance, especially in response to changing market conditions and personal financial goals. Regularly reassessing the portfolio against the Efficient Frontier can ensure it remains aligned with the investor's objectives.

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