A balanced and highly diversified portfolio with strong historical performance and moderate risk exposure
Report created on Dec 28, 2024Risk profile
4/7
Diversification profile
5/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 35.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 35.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 10.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 10.00% -
VN Vanguard Real Estate Index Fund ETF Shares
VNQ - US9229085538 10.00%
The portfolio is well-structured with a balanced mix of ETFs, primarily focusing on stocks and real estate. The allocation includes 35% in both Vanguard Total Stock Market and International Stock Index Funds, complemented by smaller allocations to Avantis International Small Cap Value, Invesco NASDAQ 100, and Vanguard Real Estate Index Funds. This composition aligns with common balanced portfolio benchmarks, offering a good mix of domestic and international exposure. A balanced allocation like this can help manage risk while providing growth opportunities. Consider maintaining this balance while occasionally reviewing for any necessary adjustments based on market conditions.
Growth
The portfolio has demonstrated strong historical performance, with a Compound Annual Growth Rate (CAGR) of 11.18% and a maximum drawdown of -27.86%. These figures suggest the portfolio has performed well over time, though it has experienced significant short-term losses during market downturns. Comparing this to benchmarks, the performance is commendable, especially for a balanced portfolio. Understanding the historical context is essential, as past performance can provide insights but does not guarantee future results. Regularly reviewing performance relative to benchmarks can help in making informed decisions about potential adjustments.
Projection
Using Monte Carlo simulations, the portfolio's future performance has been projected with a 50th percentile outcome of 321.6% and a 67th percentile of 450.5%. These simulations, based on historical data, provide a range of possible future outcomes, highlighting potential growth and risks. While simulations offer valuable insights, they are not predictive and should be interpreted with caution. The portfolio's projected annualized return of 12.26% suggests optimistic growth potential. Regularly revisiting these projections can help in aligning the portfolio with evolving financial goals and risk tolerance.
Asset classes
- Stocks 89%
- Real Estate 10%
- Cash 1%
The portfolio's asset allocation is predominantly in stocks (89.17%) with a significant real estate component (10%). This allocation supports diversification across different asset classes, though it is heavily weighted towards equities. Compared to typical balanced portfolios, which might include more bonds, this portfolio leans towards growth through equity exposure. Such an allocation can be beneficial for long-term growth but may also introduce higher volatility. Consider periodically reviewing the asset class distribution to ensure it aligns with risk tolerance and investment goals, potentially adding bonds for more stability.
Sectors
- Technology 21%
- Financials 14%
- Real Estate 12%
- Industrials 11%
- Consumer Discretionary 11%
- Health Care 8%
- Telecommunications 7%
- Basic Materials 5%
- Consumer Staples 5%
- Energy 4%
- Utilities 2%
The portfolio is diversified across various sectors, with notable allocations in technology (20.83%), financial services (13.85%), and real estate (12.20%). This sectoral spread aligns well with common benchmarks, providing a balanced exposure to different economic segments. However, the tech-heavy allocation could lead to increased volatility, especially during periods of rising interest rates. Maintaining sector balance is crucial for managing risk and capturing growth opportunities. Regularly assessing sector trends and economic conditions can help in making strategic adjustments to optimize sectoral exposure.
Regions
- North America 59%
- Europe Developed 18%
- Japan 9%
- Asia Emerging 6%
- Asia Developed 4%
- Australasia 3%
- Africa/Middle East 2%
- Latin America 1%
Geographically, the portfolio is primarily invested in North America (58.54%), followed by Europe Developed (17.72%) and Japan (8.59%). This geographic distribution offers a good mix of domestic and international exposure, though it is somewhat concentrated in developed markets. Such a composition can provide stability, but it may miss out on growth opportunities in emerging markets. Comparing this to global benchmarks, the allocation is fairly standard. Consider exploring additional geographic diversification, especially in emerging markets, to capture potential growth and spread risk across different regions.
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's current allocation could be optimized using the Efficient Frontier, which focuses on maximizing returns for a given level of risk. This method identifies the best possible risk-return ratio but is limited to the existing assets. By adjusting allocations within the portfolio, it is possible to achieve a more efficient balance. Regularly reviewing and rebalancing the portfolio to align with the Efficient Frontier can help ensure that it remains optimized for the investor's risk tolerance and return objectives, though diversification and other goals should also be considered.
Dividends
- Avantis® International Small Cap Value ETF 4.30%
- Invesco NASDAQ 100 ETF 0.60%
- Vanguard Real Estate Index Fund ETF Shares 3.80%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 3.30%
- Weighted yield (per year) 2.44%
With a total dividend yield of 2.44%, the portfolio provides a moderate income stream, complementing capital appreciation. The yield is supported by significant contributions from the Avantis International Small Cap Value (4.3%) and Vanguard Real Estate Index (3.8%) ETFs. Dividends can be a valuable component for investors seeking regular income, especially in a low-interest-rate environment. This income can help cushion volatility and support cash flow needs. Regularly reviewing dividend yields and reinvestment strategies can enhance long-term returns and align with income objectives.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Invesco NASDAQ 100 ETF 0.15%
- Vanguard Real Estate Index Fund ETF Shares 0.12%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.10%
The portfolio's total expense ratio (TER) is impressively low at 0.1%, with individual fund costs ranging from 0.03% to 0.36%. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. This cost efficiency aligns well with best practices in portfolio management, ensuring that more of the investment returns are retained. Regularly reviewing and comparing fund costs can help maintain this advantage. Consider exploring lower-cost alternatives if any high-fee assets are identified, further optimizing the portfolio's cost structure.
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