Balanced Portfolio with Strong Emphasis on US Equities and Low Costs

Report created on Jun 2, 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 primarily composed of two ETFs: 80% in a Vanguard S&P 500 ETF and 20% in a Vanguard Total International Stock Index Fund ETF Shares. This allocation showcases a significant tilt towards US equities, with international stocks serving as a diversification tool. The portfolio's broad diversification is evident, covering multiple sectors and geographic regions, though with a clear overweight in North America. The simplicity of this structure, focusing on just two asset classes—stocks and a minimal cash component—makes it straightforward to manage while still offering exposure to a wide range of companies globally.

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 12.53%, with a maximum drawdown of -33.93%. This performance indicates a strong upward trend over time, despite significant short-term volatility, as evidenced by the drawdown. The days contributing most to returns are relatively few, suggesting that timing the market plays a crucial role in capturing gains. Comparing this performance to relevant benchmarks would be essential for context, but these figures suggest robust growth, especially for investors with a balanced risk profile.

Projection Info

Using Monte Carlo simulations, which forecast potential outcomes based on historical data, the portfolio's future performance varies widely, with a median increase of 249%. While this method provides a range of possible outcomes, it's critical to remember that past performance doesn't guarantee future results. The simulations show a strong likelihood of positive returns, but the wide range between the 5th and 67th percentiles underscores the inherent uncertainties in market investments.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is almost entirely in stocks (99%), with a negligible cash reserve (1%). This high equity exposure aligns with the portfolio's balanced risk classification, aiming for growth while accepting moderate volatility. The absence of bonds or other asset classes might limit opportunities for risk reduction during equity market downturns. Investors might consider incorporating bonds or other less volatile assets to achieve a more balanced risk-return profile.

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 diverse, with technology (28%) and financial services (16%) being the most prominent. This tech-heavy focus is common in modern portfolios, especially those weighted towards US equities, reflecting the sector's significant growth in recent years. However, such concentration can increase volatility and risk, particularly if tech valuations face corrections. Balancing sector exposures could mitigate this risk while still capturing growth opportunities across the economy.

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 heavily skewed towards North America (81%), with modest allocations to developed Europe (8%) and emerging Asian markets (3%). This concentration in developed markets, particularly the US, aligns with the portfolio's growth orientation but may limit exposure to emerging market growth opportunities. Diversifying more into emerging and frontier markets could enhance growth potential and reduce geographic concentration risk.

Market capitalization Info

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

The portfolio's market capitalization breakdown—46% mega, 33% big, 18% medium, and a minimal 1% in small caps—indicates a preference for large, established companies. This bias towards larger companies may contribute to stability and lower volatility but could also limit potential for high growth rates seen in smaller companies. Considering a slight increase in small and medium-cap exposure might offer a better balance between risk and return.

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 current allocation suggests a balanced approach, aiming to maximize returns for a given level of risk, as indicated by its risk score of 4 out of 7. However, employing the Efficient Frontier concept could further optimize the risk-return profile. This method may recommend slight adjustments in asset allocation to achieve the most efficient combination, potentially improving the portfolio's performance without significantly increasing risk.

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 1.62%, with the Vanguard S&P 500 ETF and Vanguard Total International Stock Index Fund ETF Shares yielding 1.30% and 2.90%, respectively. This yield contributes to the portfolio's total return, providing a steady income stream in addition to potential capital gains. For investors prioritizing income, adjusting the allocation to increase the average yield, while considering the impact on growth and risk, might be beneficial.

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 supports better long-term performance by minimizing the drag on returns. This cost efficiency is a strong point, particularly in a low-yield environment, as every saved penny contributes directly to net returns. Maintaining focus on low-cost investments remains a prudent strategy.

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