Balanced portfolio with a strong tilt towards tech and developed markets

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 while willing to accept moderate volatility. The investor likely has a medium to long-term investment horizon, aiming for capital appreciation with some level of income through dividends. This individual is comfortable with market fluctuations and understands the importance of diversification across asset classes and geographies, albeit with a stronger emphasis on developed markets and technology sectors.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    25.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    20.00%
  • Vanguard Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    15.00%

The portfolio is structured with a significant emphasis on equity ETFs, comprising 85% of the total allocation, split among major indices and sectors, with the remaining 15% allocated to bonds. This composition leans heavily towards stocks, particularly those within the S&P 500, developed international markets, and the NASDAQ 100, reflecting a growth-oriented approach with moderate risk. The bond allocation, through the Vanguard Total Bond Market Index Fund, provides a counterbalance, aiming to mitigate volatility and offer income through dividends.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 12.08%, with a maximum drawdown of -26.45%. The performance is notably robust, likely due to the strong emphasis on equity ETFs tracking major indices, which have historically performed well. However, the max drawdown indicates significant volatility, which is expected given the high stock allocation. The days contributing to 90% of returns being so few highlights the impact of short-term high-gain periods on overall performance.

Projection Info

Monte Carlo simulations, which project future performance based on historical data, suggest a wide range of outcomes for this portfolio. The 50th percentile outcome of a 261.3% return is optimistic, indicating potential for substantial growth. However, the broad spread between the 5th and 67th percentiles underscores the inherent uncertainty and risk. It's crucial to remember that these projections cannot guarantee future performance but offer a useful perspective on potential volatility and growth.

Asset classes Info

  • Stocks
    84%
  • Bonds
    15%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The allocation across asset classes with 84% in stocks and 15% in bonds reflects a balanced yet growth-focused approach. This mix aims to capture the growth potential of equities while using bonds to provide income and reduce volatility. The minimal cash allocation suggests a fully invested stance, maximizing potential returns. This asset class distribution is appropriate for a balanced portfolio but leans towards higher risk and return potential.

Sectors Info

  • Technology
    26%
  • Financials
    11%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    8%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a heavy emphasis on technology, followed by financial services and consumer cyclicals. This tech-heavy focus aligns with recent trends favoring innovation and digital transformation but may increase volatility, especially during market downturns or sector-specific shocks. Diversifying across more sectors or reducing the tech weighting could help mitigate this risk while still capitalizing on growth opportunities in other areas.

Regions Info

  • North America
    62%
  • Europe Developed
    14%
  • Japan
    5%
  • Asia Developed
    2%
  • Australasia
    2%
  • Africa/Middle East
    0%
  • Asia Emerging
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America and developed European markets, with minor allocations to Japan and Australasia. The lack of exposure to emerging markets may limit diversification benefits and growth potential from faster-growing economies. Considering a modest increase in emerging market exposure could enhance diversification and capture growth outside of developed markets.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    28%
  • Mid-cap
    14%
  • Small-cap
    1%
  • Micro-cap
    0%

The focus on mega and big-cap stocks (69% combined) suggests a preference for stability and established companies, likely contributing to the portfolio's robust historical performance. However, the limited exposure to medium, small, and micro-cap stocks may restrict opportunities for outsized gains from smaller companies. Introducing a measured allocation to smaller caps could offer higher growth potential, albeit with increased risk.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.80%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.82%

The portfolio's dividend yield of 1.82% contributes to its total return, with the bond component providing a significant income boost at a 3.80% yield. While the equity ETFs offer lower yields, they balance income generation with growth potential. For investors seeking higher income, reallocating towards higher-yielding assets or dividend-focused funds could increase cash flow without drastically altering the portfolio's risk profile.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

With a total expense ratio (TER) of 0.06%, the portfolio benefits from low costs, maximizing net returns for the investor. This efficiency is particularly noteworthy given the diversified exposure across major equity markets and bonds. Maintaining focus on low-cost ETFs is crucial for long-term performance, as even small differences in fees can significantly impact compounded returns 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.

Regarding risk vs. return optimization, the portfolio appears well-positioned near the Efficient Frontier, suggesting an effective balance between risk and expected returns. However, continuous monitoring and occasional rebalancing are essential to maintain this balance, especially considering market fluctuations and changes in the economic landscape. Adjustments to asset allocation or diversification strategies may further optimize the portfolio's position on the Efficient Frontier.

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