A portfolio leaning towards international diversification with a strong performance outlook
Report created on Jul 21, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 90.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 10.00%
This portfolio is heavily weighted towards international stocks, with a 90% allocation in the Vanguard Total International Stock Index Fund ETF Shares and a 10% allocation in the Vanguard Total Stock Market Index Fund ETF Shares. Such a distribution suggests a strategic emphasis on global diversification, aiming to capture growth across a wide range of markets outside the United States. This approach is somewhat unconventional for U.S.-based investors, who often favor a more balanced domestic-to-international allocation ratio.
Growth
The portfolio’s historic performance, with a Compound Annual Growth Rate (CAGR) of 8.47% and a maximum drawdown of -34.82%, indicates a resilient growth trajectory amidst market volatility. The days contributing 90% of returns being limited to 18 suggests significant returns were achieved on relatively few days, emphasizing the importance of staying invested through market cycles. Comparing this performance to benchmarks would be crucial for context, but the data suggests a strong performance given the risk profile.
Projection
Forward projections based on Monte Carlo simulations, with a median (50th percentile) outcome of a 281.4% increase, signal a robust growth potential. The wide range between the 5th and 67th percentiles indicates considerable variability in potential outcomes, a common trait in equity-heavy portfolios. These projections, while optimistic, should be taken with caution as they are based on historical data and cannot guarantee future performance.
Asset classes
- Stocks 97%
- Cash 3%
The asset class distribution of 97% stocks and 3% cash aligns with the portfolio's growth-oriented strategy. This heavy stock allocation is typical for portfolios seeking higher returns, albeit with increased volatility. The absence of bonds or alternative investments might limit risk mitigation options, suggesting a review of risk tolerance and investment horizon could be beneficial.
Sectors
- Financials 22%
- Industrials 15%
- Technology 15%
- Consumer Discretionary 10%
- Health Care 8%
- Consumer Staples 6%
- Basic Materials 6%
- Telecommunications 6%
- Energy 4%
- Utilities 3%
- Real Estate 3%
Sector allocation shows a diversified exposure, with financial services, industrials, and technology sectors leading. This diversification across sectors can help mitigate sector-specific risks and capitalize on growth opportunities in different areas of the economy. However, the significant weight in technology and financial services sectors may introduce higher volatility, reflecting broader market trends.
Regions
- Europe Developed 35%
- North America 17%
- Asia Emerging 14%
- Japan 14%
- Asia Developed 9%
- Australasia 4%
- Africa/Middle East 3%
- Latin America 2%
- Europe Emerging 1%
Geographic allocation underscores the portfolio's international focus, with significant exposure to developed Europe, emerging Asia, and Japan. This broad geographic spread can offer growth opportunities in different economic cycles but also introduces currency and geopolitical risks. The underweight position in North America, particularly the U.S., is notable and diverges from the typical home country bias of U.S. investors.
Market capitalization
- Mega-cap 44%
- Large-cap 31%
- Mid-cap 17%
- Small-cap 4%
- Micro-cap 1%
The market capitalization breakdown, with a bias towards mega and big-cap stocks, suggests a preference for established, large-scale companies. This can provide stability and lower volatility compared to portfolios with higher allocations to small or micro-cap stocks. However, it may also limit potential high-growth opportunities often found in smaller companies.
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 portfolio's expected return is below the optimal portfolio's expected return of 14.05% at a similar risk level, suggesting room for improvement. However, achieving higher returns often involves taking on more risk. Investors should balance the desire for higher returns against their risk tolerance and investment horizon. Optimization should consider not just asset allocation but also the investor's financial goals and market outlook.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 2.64%
The dividend yields, with a total portfolio yield of 2.64%, contribute to the portfolio’s total return. This yield is a crucial component of long-term investment strategies, offering a steady income stream in addition to potential capital gains. Given the portfolio's international exposure, it's important to consider the tax implications of foreign dividends.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.05%
With a total expense ratio (TER) of 0.05%, the portfolio benefits from low costs, which can significantly enhance long-term returns. Vanguard's reputation for low-cost funds aligns well with the goal of maximizing investor returns by minimizing expenses. This efficient cost structure is a strong foundation for building wealth over time.
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