A balanced and broadly diversified portfolio with a focus on US equities and low costs

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to global equities, making it ideal for individuals looking to build wealth over time. The mix of US and international equities with a small allocation to bonds provides both growth potential and some stability. This approach is well-suited for investors who are comfortable with market fluctuations and are focused on achieving their financial objectives over a longer period.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    72.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    18.00%
  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares
    VGIT - US92206C7065
    10.00%

This portfolio is composed primarily of equity ETFs, with a significant 72% allocation to the Vanguard Total Stock Market Index Fund. International stocks account for 18%, and intermediate-term treasuries make up the remaining 10%. This composition reflects a balanced approach, with a strong emphasis on equities for growth while maintaining some fixed income for stability. Compared to common benchmarks, this allocation leans more towards equities, which may enhance growth potential but also increase volatility. Consider whether this weighting aligns with your risk tolerance and investment goals, and adjust if necessary to ensure it meets your personal financial objectives.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.23%, indicating strong past performance. However, it also experienced a significant maximum drawdown of -32.05%, reflecting the potential for substantial losses during market downturns. This performance suggests a robust growth profile, typical of equity-heavy portfolios, but also highlights the importance of being prepared for volatility. It's crucial to remember that past performance does not guarantee future results. Regularly reviewing your portfolio's historical performance in the context of your risk tolerance can help you stay on track with your investment goals.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of potential returns. With a 50th percentile projection of 134.46% and an annualized return of 7.32%, the portfolio has a strong outlook. However, the 5th percentile projection of 0.62% highlights the uncertainty inherent in investing. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold true in the future. Use these projections as a guide, but remain flexible and open to adjusting your strategy as market conditions evolve.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted towards stocks, with 89.22% in equities, 9.93% in bonds, and a minimal allocation to cash and other assets. This allocation is typical for a balanced portfolio, providing growth potential through equities while offering some stability through bonds. Compared to benchmarks, the stock allocation is slightly higher, which may increase potential returns but also volatility. Consider your risk tolerance when evaluating this distribution, and ensure it aligns with your long-term financial goals. Diversifying across more asset classes could further enhance risk management and return potential.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio's sector allocation is well diversified, with technology, financial services, and consumer cyclicals being the largest sectors. Technology accounts for 25.39%, which is above typical benchmark levels, indicating a potential for higher volatility and growth. This sectoral balance provides exposure to various economic cycles, reducing risk associated with sector-specific downturns. However, the high concentration in technology could lead to increased volatility, especially during interest rate hikes. Regularly reviewing sector weights and considering adjustments to align with economic trends can help optimize risk and return.

Regions Info

  • North America
    73%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, with 73.15% exposure, followed by smaller allocations to Europe, Asia, and other regions. This geographic concentration aligns with many benchmarks but may limit exposure to growth opportunities in emerging markets. Diversifying geographically can reduce risk associated with regional economic downturns and increase potential returns by capturing global growth trends. Consider whether your geographic exposure aligns with your investment goals and risk tolerance, and explore opportunities to increase exposure to underrepresented regions for greater diversification.

Dividends Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.88%

The portfolio's overall dividend yield is 1.88%, with the Vanguard Total International Stock Index Fund offering the highest yield at 3.4%. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. For investors seeking income, maintaining a focus on dividend-paying assets can enhance portfolio stability. However, it's essential to balance the pursuit of yield with growth objectives, ensuring that the portfolio remains aligned with your long-term financial goals.

Ongoing product costs Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
  • 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) 0.04%

The portfolio boasts impressively low costs, with a total expense ratio (TER) of 0.04%. This low-cost structure is beneficial for long-term performance, as it allows more of your investment returns to compound over time. Keeping costs low is a key component of successful investing, as high fees can erode returns significantly. Regularly reviewing your portfolio's expense ratios and exploring opportunities to reduce costs further, such as switching to lower-cost funds or ETFs, can help optimize your investment strategy.

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.

The portfolio appears to be well-positioned on the Efficient Frontier, offering a strong risk-return ratio based on the current asset allocation. This optimization suggests that the portfolio is effectively balancing risk and return, maximizing potential gains for the level of risk taken. While this is a positive sign, it's important to remember that the Efficient Frontier is based on historical data and assumptions that may not hold in the future. Regularly reviewing and rebalancing your portfolio can help maintain its efficiency and alignment with your investment goals.

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