A balanced global portfolio with broad diversification and cost efficiency
Report created on Apr 11, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 75.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 25.00%
The portfolio consists of two ETFs: Vanguard Total International Stock Index Fund ETF Shares at 75% and Vanguard Total Stock Market Index Fund ETF Shares at 25%. This allocation results in a broad exposure to both international and domestic markets. Compared to a typical balanced portfolio, this one leans heavily on international equities. The composition is well-aligned with the goal of broad diversification, offering exposure across various regions and sectors. However, this focus on equities may expose the portfolio to higher volatility. To enhance stability, consider incorporating fixed-income assets.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 7.22%, with a maximum drawdown of -34.54%. This indicates moderate growth with significant exposure to market downturns. Comparing this to a benchmark like a global stock index, the performance is consistent with a typical equity-heavy portfolio. While past performance is not a guarantee of future results, the historical data provides a reasonable expectation of similar future trends. To mitigate drawdowns, consider strategies like rebalancing or diversifying into other asset classes.
Projection
The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a 50th percentile end portfolio value of 179.6% and an annualized return of 9.31%. With 930 out of 1,000 simulations yielding positive returns, the outlook is optimistic. However, the 5th percentile showing a -12.3% return highlights the potential downside risk. While simulations provide a range of possible outcomes, they are based on historical trends and assumptions. Regularly reviewing and adjusting the portfolio in response to market changes can help manage risk.
Asset classes
- Stocks 98%
- Cash 2%
The portfolio's allocation is heavily skewed towards stocks, with 98% in equities and 2% in cash. This concentration in equities can drive growth but also increases volatility. Compared to a diversified portfolio that includes bonds or alternative investments, this allocation may lack defensive characteristics. For a balanced risk-return profile, consider diversifying into asset classes such as bonds or real estate, which can provide stability and income during market downturns.
Sectors
- Financials 20%
- Technology 18%
- Industrials 13%
- Consumer Discretionary 11%
- Health Care 9%
- Telecommunications 7%
- Consumer Staples 6%
- Basic Materials 6%
- Energy 4%
- Real Estate 3%
- Utilities 3%
Sector allocation is diverse, with notable weighting in financial services (20%) and technology (18%). This balance aligns well with common benchmarks, providing exposure to various economic sectors. However, tech-heavy allocations can lead to increased volatility, especially during periods of interest rate fluctuations. Keeping an eye on sector trends and potential economic shifts can help in making informed adjustments to maintain balance and reduce sector-specific risks.
Regions
- North America 31%
- Europe Developed 30%
- Asia Emerging 12%
- Japan 12%
- Asia Developed 8%
- Australasia 4%
- Africa/Middle East 3%
- Latin America 1%
- Europe Emerging 1%
The geographic allocation is well-diversified, with significant exposure to North America (31%) and Europe Developed (30%). This distribution aligns with global benchmarks, offering a balanced exposure to developed and emerging markets. However, the portfolio's limited exposure to regions like Latin America and Africa/Middle East may miss out on growth opportunities in these areas. Increasing allocation to underrepresented regions could enhance diversification and capture potential growth.
Market capitalization
- Mega-cap 44%
- Large-cap 31%
- Mid-cap 18%
- Small-cap 4%
- Micro-cap 1%
The portfolio is heavily weighted towards mega-cap (44%) and big-cap (31%) companies. This bias towards larger companies can provide stability and lower volatility compared to small-cap stocks. However, it may also limit growth potential. Including more small and mid-cap stocks can enhance growth opportunities, albeit with increased risk. Balancing market capitalization exposure can optimize growth while managing risk.
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 currently has room for optimization on the Efficient Frontier, which suggests a more efficient risk-return ratio could be achieved. The optimal portfolio has an expected return of 12.07% with a risk level of 18.55%. While optimization can enhance returns, it may also increase risk. Balancing the desire for higher returns with acceptable risk levels is key to maintaining a suitable investment strategy.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.50%
- Vanguard Total International Stock Index Fund ETF Shares 3.30%
- Weighted yield (per year) 2.85%
The portfolio's dividend yield is 2.85%, with the Vanguard Total International Stock Index Fund ETF Shares contributing a higher yield of 3.30%. Dividends can provide a steady income stream, especially for investors seeking regular cash flow. This yield is competitive when compared to traditional savings accounts or fixed-income investments. To maximize income, consider reinvesting dividends or exploring higher-yielding assets.
Ongoing product costs
- 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 a Total Expense Ratio (TER) of 0.04%, the portfolio is highly cost-efficient. Low costs are crucial for long-term returns, as they minimize the drag on performance. Compared to industry averages, this TER is impressively low, supporting better compounding over time. Maintaining this cost efficiency is advisable, as it allows more of the portfolio's returns to be retained by the investor.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
Compare your holdings
How much do the funds you hold actually overlap with the ones people weigh them against?
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