A balanced and highly diversified portfolio with strong global equity exposure and low costs

Report created on Jan 6, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 60% domestic equities, 20% international equities, 10% domestic bonds, and 10% international bonds. This structure aligns with a balanced approach, offering growth potential through a significant equity allocation while maintaining stability with bond investments. Compared to common benchmarks, this allocation is well-balanced, providing a mix of growth and income. It's important to periodically review the asset allocation to ensure it continues to meet your investment goals and risk tolerance.

Growth Info

The historical performance of this portfolio shows a robust CAGR of 9.91%, indicating strong growth over time. The maximum drawdown of -29.85% highlights potential volatility, typical for portfolios with significant equity exposure. Comparing this to benchmarks, the return is competitive, though the drawdown suggests room for risk mitigation. It’s crucial to remember that past performance does not guarantee future results, so continuing to monitor portfolio performance against relevant benchmarks is advisable.

Projection Info

Using Monte Carlo simulations, which analyze potential outcomes based on historical data, the portfolio's forward projection shows a median growth of 109.49%. This suggests a positive outlook, with 927 out of 1,000 simulations predicting positive returns. However, the 5th percentile indicates a potential downside of -9.26%. Remember, these projections are not guarantees but provide a range of possible outcomes, emphasizing the importance of staying informed and adaptable to market changes.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%

The portfolio's asset class distribution includes approximately 79.47% stocks and 19.64% bonds, with minimal allocations to cash and other assets. This allocation is typical for balanced portfolios, offering growth through equities while bonds provide income and stability. Compared to benchmarks, the stock-bond ratio is standard, supporting moderate risk tolerance. Regular reviews can ensure the asset allocation aligns with your evolving financial objectives and market conditions.

Sectors Info

  • Technology
    21%
  • Financials
    12%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diversified, with technology (21.09%) and financial services (12.25%) being the most significant. This mirrors common benchmarks, ensuring broad sector exposure. A tech-heavy allocation may lead to higher volatility during interest rate fluctuations, while financials can offer stability. Balancing sector weights can enhance risk management and capitalize on emerging trends, so consider periodic adjustments to maintain diversification.

Regions Info

  • North America
    61%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America (61.32%), with limited exposure to emerging markets. This aligns with typical benchmarks but may limit growth potential from high-growth regions. A more balanced global allocation could enhance diversification and potentially improve returns. Consider assessing whether increasing exposure to underrepresented regions aligns with your investment goals and risk tolerance.

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 can be optimized using the Efficient Frontier, focusing on achieving the best risk-return ratio with the current assets. This involves adjusting allocations to enhance efficiency, not diversification. The goal is to maximize returns for a given risk level, ensuring the portfolio remains aligned with your risk tolerance and investment objectives. Regular optimization helps adapt to market changes, maintaining an optimal risk-return balance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total International Bond Index Fund ETF Shares 4.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.25%

The portfolio's dividend yield stands at 2.25%, with bond ETFs contributing significantly. This yield provides a steady income stream, valuable for investors seeking regular payouts. Dividend yields can cushion against market volatility, supporting income-focused strategies. Monitoring dividend policies and yields helps maintain income levels and adjust strategies as needed to align with financial goals.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Bond Index Fund ETF Shares 0.07%
  • 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's total expense ratio (TER) is impressively low at 0.04%, primarily due to the use of Vanguard ETFs. Low costs enhance long-term returns by minimizing fees that erode gains. This cost efficiency aligns with best practices, supporting better compounding over time. Continually evaluating fund expenses ensures costs remain competitive, maximizing net returns and supporting overall financial success.

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