A balanced portfolio with a strong focus on US equities and low-cost investments

Report created on Jan 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 70% in the Vanguard Total Stock Market Index Fund ETF. Bonds account for 20% of the allocation, split between domestic and international bonds. The remaining 10% is in international equities. Compared to a typical balanced portfolio, this one leans more towards equities, which can offer higher growth potential but also increased volatility. It's moderately diversified, with a focus on broad market index funds. This composition aligns well with a balanced risk profile, aiming for growth while maintaining some stability through bond investments.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 10.56%, indicating solid returns over time. The maximum drawdown of -30.18% reflects the potential risks during market downturns. For context, a typical balanced portfolio might experience similar drawdowns during volatile periods. The portfolio's performance highlights its ability to recover and grow over time, benefiting from its equity-heavy composition. Investors should consider their comfort with such drawdowns, as past performance is not a guarantee of future results, but it provides insights into potential risks and rewards.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. The median outcome is a 107.34% increase, with a 67th percentile projection of 159.29%. This indicates a strong potential for growth, though there's a 5% chance of a -6.69% return. While simulations provide a useful glimpse into possible futures, they rely on past data and assumptions that may not hold. It's important to consider these projections as part of a broader strategy, balancing optimism with the inherent uncertainties of investing.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%
  • Cash
    1%

The portfolio's asset class distribution is predominantly in stocks (79.65%), with a smaller allocation to bonds (19.64%). This skew towards equities aligns with a growth-focused strategy but may expose the portfolio to higher volatility. Compared to a typical balanced portfolio, this one is more aggressive, potentially offering higher returns but also greater risk. The limited cash allocation suggests a commitment to staying invested, which can be beneficial for long-term growth. Balancing this allocation with personal risk tolerance and investment goals is crucial for optimizing outcomes.

Sectors Info

  • Technology
    23%
  • Financials
    11%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Utilities
    2%

Sector allocation is diversified, with the largest exposure in Technology (22.85%), followed by Financial Services (11.48%) and Healthcare (8.98%). This distribution mirrors common benchmarks, indicating a balanced approach to sector risk. Tech-heavy portfolios like this one may experience more volatility, especially during interest rate changes. However, the broad sector exposure helps mitigate risks associated with any single industry. It's important to monitor sector trends and adjust allocations as needed to maintain diversification and align with market conditions.

Regions Info

  • North America
    70%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America (70.47%), with limited exposure to other regions. This focus on the US market can drive growth but may increase vulnerability to regional economic shifts. Compared to global benchmarks, the portfolio underrepresents emerging markets, which could offer diversification benefits. Expanding geographic exposure could enhance resilience against localized downturns and tap into growth opportunities in other regions. Balancing regional allocations can improve overall portfolio diversification and align with global economic trends.

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 could potentially be optimized using the Efficient Frontier, which seeks the best risk-return balance for a given set of assets. This involves adjusting allocations to achieve the highest possible return for a specific level of risk. While the current asset mix is well-aligned with a balanced profile, exploring optimization strategies could further enhance performance. It's important to note that optimization focuses on risk and return, and may not address other goals like income or geographic diversification. Regular reviews can help maintain an optimal 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) 2.04%

The portfolio has a modest total dividend yield of 2.04%, with contributions from both stock and bond ETFs. While dividends provide a steady income stream, the primary focus here seems to be on growth rather than income. This yield aligns with the balanced risk profile, offering some income while prioritizing capital appreciation. Investors seeking higher income might consider increasing bond allocations or exploring dividend-focused equities. Balancing income needs with growth objectives is key to optimizing the portfolio for long-term success.

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 costs are impressively low, with a total expense ratio (TER) of 0.04%. This is a significant advantage, as lower costs enhance long-term returns by minimizing the drag on performance. Vanguard's focus on low-cost index funds aligns well with best practices for cost-efficient investing. Maintaining this low-cost structure supports better compounding over time, contributing to overall portfolio growth. Investors should continue to monitor and manage costs, ensuring that any changes in fund fees or allocations do not negatively impact the portfolio's efficiency.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey