A balanced portfolio with strong diversification and a focus on retirement target funds

Report created on Jan 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of target retirement funds, making up nearly 78% of the allocation. These funds are designed to gradually shift from stocks to bonds as a target date approaches. The rest is divided among ETFs focusing on large-, mid-, and small-cap stocks. Compared to typical balanced portfolios, this one leans heavily on target date funds, which can provide a simple, hands-off investment strategy. To enhance diversification, consider adding more varied asset types or reducing reliance on target date funds.

Growth Info

Historically, this portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 9.0%, which is commendable for a balanced profile. The maximum drawdown of nearly -30% indicates potential volatility during market downturns. Compared to benchmark indices, this performance is competitive, though not without risk. Investors should be aware that past performance does not guarantee future results. To manage risk, consider strategies like rebalancing or diversifying further into lower-volatility assets.

Projection Info

Using Monte Carlo simulations, which predict future performance by analyzing historical data, this portfolio shows promising potential. With a median projected return of 271.37% and a positive return in 975 out of 1,000 simulations, the outlook is optimistic. However, these projections are based on past data and cannot guarantee future outcomes. Investors should use these insights as a guide but remain flexible to adjust strategies as market conditions evolve.

Asset classes Info

  • Stocks
    75%
  • Bonds
    24%
  • Cash
    1%

The portfolio predominantly invests in stocks, with over 75% allocation, while bonds take up nearly 24%. This allocation aligns with a balanced risk profile, offering growth potential and some income stability. Compared to typical balanced portfolios, the stock allocation is slightly higher, which may increase returns but also risk. To ensure stability, consider gradually increasing bond exposure as personal risk tolerance or market conditions dictate.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    11%
  • Health Care
    11%
  • Consumer Discretionary
    8%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%
  • Consumer Discretionary
    3%

The portfolio is well-diversified across various sectors, with technology and financial services leading the way. Such sectoral diversity helps mitigate risk, as downturns in one sector may be offset by gains in another. However, a high concentration in technology could lead to volatility, especially during economic shifts affecting this sector. Regularly reviewing sector allocations can help maintain balance and adapt to changing market conditions.

Regions Info

  • North America
    73%
  • Europe Developed
    11%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, with over 72% exposure. While this aligns with many global benchmarks, it may limit diversification benefits. Exposure to Europe, Asia, and other regions is present but minimal. To enhance global diversification and reduce regional risk, consider increasing allocations to underrepresented areas, potentially capitalizing on growth opportunities abroad.

Redundant positions Info

  • VANGUARD TARGET RETIREMENT 2040 FUND INVESTOR SHARES
    VANGUARD TARGET RETIREMENT 2030 FUND INVESTOR SHARES
    Vanguard Mid-Cap Index Fund ETF Shares
    iShares Core S&P 500 ETF
    High correlation

The portfolio contains several highly correlated assets, particularly within the target retirement funds and S&P ETFs. High correlation means these assets tend to move together, which can limit diversification benefits. In market downturns, this could lead to increased portfolio volatility. To improve resilience, consider replacing some correlated assets with alternatives that have a lower correlation to the rest of the portfolio.

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.

Click on the colored dots to explore allocations.

The portfolio could benefit from optimization on the Efficient Frontier, which seeks the best risk-return ratio. With current assets, adjustments in allocation could enhance efficiency without needing new investments. However, this optimization focuses solely on risk-return improvements and may not address all diversification or income goals. Regular reviews and adjustments can ensure the portfolio remains aligned with personal objectives.

Dividends Info

  • iShares Core S&P 500 ETF 1.30%
  • Vanguard Mid-Cap Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 0.23%

The portfolio's dividend yield is modest at 0.23%, reflecting its focus on growth-oriented funds rather than income. While dividends can provide a steady income stream, they are not the primary focus here. For investors seeking more income, incorporating higher-yielding assets could be beneficial. However, this should be balanced against the potential for growth.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • VANGUARD TARGET RETIREMENT 2040 FUND INVESTOR SHARES 0.08%
  • Vanguard S&P Small-Cap 600 Index Fund ETF Shares 0.10%
  • Vanguard Mid-Cap Index Fund ETF Shares 0.04%
  • VANGUARD TARGET RETIREMENT 2030 FUND INVESTOR SHARES 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of just 0.07%. This low-cost structure supports better long-term performance by minimizing fees that can erode returns. Compared to industry averages, these costs are highly competitive. Maintaining this low-cost approach while ensuring effective diversification and alignment with investment goals is a positive strategy.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey