A balanced portfolio with a strong foundation in US equities and international diversification

Report created on Jun 9, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up 80% of the allocation, with the remaining 20% in the Vanguard Total International Stock Index Fund ETF Shares. This composition illustrates a strong foundation in US equities, complemented by international exposure to diversify risk and potential returns. The emphasis on just two ETFs, however, limits exposure to alternative asset classes, which could be a missed opportunity for further diversification and risk management.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 12.67%, with a maximum drawdown of -33.93%. These figures suggest a resilient performance, especially considering the drawdown which indicates the portfolio's volatility during market downturns. The days contributing to 90% of returns being relatively few highlight the importance of staying invested over the long term to capture significant growth spurts.

Projection Info

The Monte Carlo simulation, utilizing historical data to forecast future performance, suggests a wide range of outcomes with a median annualized return of 10.84%. While such simulations offer valuable insights, it's crucial to remember they are based on past trends, which may not always predict future movements accurately. This underscores the importance of a well-thought-out risk management strategy.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is almost entirely in stocks (99%), with a minimal cash holding (1%). This asset class distribution aligns with a growth-oriented strategy but comes with higher volatility and risk. Diversifying across different asset classes, including bonds or real estate, could provide a buffer during stock market downturns, potentially smoothing out returns over time.

Sectors Info

  • Technology
    28%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is heavily weighted towards technology, financial services, and consumer cyclicals, which are sectors known for their growth potential but also for their volatility. This concentration could expose the portfolio to sector-specific risks. Diversification across a broader range of sectors could mitigate this risk while still allowing for significant growth opportunities.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America (81%), with modest exposure to developed Europe and emerging Asian markets. This geographic distribution supports stability through investments in developed markets while tapping into growth in emerging markets. However, the limited exposure to emerging and frontier markets may mean missing out on higher growth potentials offered by these regions.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    33%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization breakdown shows a strong tilt towards mega and big-cap stocks, which are typically less volatile than smaller companies. This allocation supports the portfolio's balanced risk profile but may limit potential upside from high-growth small and micro-cap stocks, which could offer diversification benefits and higher returns over the long term.

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.

Considering the Efficient Frontier, the portfolio appears to be positioned for a balanced risk-return profile but may not be fully optimized. Adjusting the asset allocation to include a wider variety of asset classes and reducing the correlation between holdings could potentially move the portfolio closer to the Efficient Frontier, achieving a better risk-return balance.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.62%

The portfolio's dividend yield stands at an overall 1.62%, with the international ETF offering a higher yield. This income component can provide a steady cash flow, which is beneficial in all market conditions. For investors seeking income, focusing on assets with higher dividend yields while balancing growth prospects could enhance the portfolio's income generation without significantly increasing risk.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.03%

With total portfolio costs averaging 0.03%, the portfolio benefits from exceptionally low expenses, which is commendable. Lower costs directly translate to higher net returns over time, making this a strong aspect of the portfolio's construction. Maintaining a focus on cost efficiency is crucial, especially in lower-yield environments where every basis point counts towards overall performance.

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