Balanced portfolio with strong US focus and solid international exposure

Report created on Apr 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three Vanguard ETFs: S&P 500 (50%), Total International Stock (40%), and Small-Cap Value (10%). Compared to a typical balanced portfolio, it leans heavily on US equities, which can be beneficial for stability and growth. This allocation is well-balanced and aligns closely with global standards, providing a solid foundation for long-term growth. For a balanced portfolio, 50% exposure to the S&P 500 is common, but consider adjusting the international allocation if seeking broader diversification.

Growth Info

Historically, this portfolio has delivered a CAGR of 9.67%, indicating strong performance over time. The max drawdown of -34.87% is a reminder of potential volatility, especially during market downturns. This performance is comparable to broad market benchmarks, demonstrating resilience and growth potential. While past performance does not guarantee future results, the historical data suggests a robust strategy. Continuously monitoring performance against benchmarks will help ensure the portfolio remains on track.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, show a median projected return of 185.2%. While 942 out of 1,000 simulations resulted in positive returns, it's crucial to note that projections are not guarantees. The 5th percentile result of -8.1% highlights potential downside risk. This simulation provides a range of possible outcomes, helping investors understand potential risks and rewards. Regularly reviewing projections can assist in aligning the portfolio with personal financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks (99%), with only 1% in cash. This allocation maximizes growth potential but increases exposure to market volatility. Compared to a typical balanced portfolio, which might include bonds or other asset classes, this portfolio is more aggressive. Diversifying into additional asset classes could reduce risk and enhance stability. Consider incorporating bonds or real assets to provide a buffer during market downturns.

Sectors Info

  • Technology
    22%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    12%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is diverse, with technology (22%) and financial services (18%) leading. This distribution is consistent with major benchmarks, providing exposure to key economic drivers. However, the tech-heavy weighting could lead to higher volatility, especially during interest rate hikes. Maintaining a balanced sector distribution helps mitigate sector-specific risks. Regularly reviewing sector trends and adjusting allocations accordingly can optimize performance.

Regions Info

  • North America
    63%
  • Europe Developed
    16%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is concentrated in North America (63%), with significant exposure to Europe (16%) and Asia (6%). This mirrors a typical US-centric portfolio but may lack exposure to emerging markets, which can offer growth opportunities. Diversifying geographically can reduce regional risk and capture global growth. Consider increasing allocations to underrepresented regions to benefit from diverse economic cycles.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    30%
  • Mid-cap
    18%
  • Small-cap
    8%
  • Micro-cap
    1%

The portfolio is diversified across market capitalizations, with a focus on mega (41%) and big (30%) companies. This provides stability and growth potential, as larger companies tend to be more resilient. However, the smaller allocation to small (8%) and micro (1%) caps could limit upside potential from high-growth companies. Balancing market cap exposure can enhance diversification and capture growth across different company sizes.

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.

This portfolio can be optimized using the Efficient Frontier, which balances risk and return for the current assets. By adjusting allocations within the portfolio, you can aim for the best possible risk-return ratio. While this optimization focuses on existing assets, it doesn't account for diversification or other goals. Regularly reviewing and adjusting allocations can enhance efficiency and align with financial objectives.

Dividends Info

  • Vanguard Small-Cap Value Index Fund ETF Shares 1.10%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.13%

The portfolio's average dividend yield is 2.13%, with the Total International Stock ETF contributing the most. Dividends provide a steady income stream, which can be reinvested for compound growth. This yield aligns well with a balanced investment strategy, offering both income and growth potential. Regularly reviewing dividend policies and yields can ensure the portfolio remains aligned with income goals.

Ongoing product costs Info

  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, supporting better long-term performance by minimizing costs. Lower costs mean more of your returns stay in your pocket, enhancing compounding effects over time. This cost efficiency is a strong indicator of prudent investment management. Continuously monitoring and minimizing costs will help maintain the portfolio's competitive edge.

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