A balanced and highly diversified portfolio with a strong focus on global equities and bonds

Report created on Nov 12, 2024

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 evenly split across four ETFs, each representing a quarter of the total investment. This structure includes broad exposure to both U.S. and international stocks, alongside U.S. bonds, providing a well-rounded mix of asset classes. The equal weighting across diverse geographical regions and asset types suggests an intentional strategy to balance risk and return. This approach aligns with best practices for investors seeking moderate growth while maintaining a cushion against market volatility through bonds.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 11.56% and a maximum drawdown of -27.75%, the portfolio has demonstrated resilience and growth potential. The days contributing to 90% of returns highlight the impact of significant market movements on performance. Comparing these figures to benchmarks can offer insight into the portfolio's risk-adjusted returns, indicating its efficiency in capitalizing on market opportunities while managing downside risk.

Projection Info

The Monte Carlo simulation, projecting a wide range of potential outcomes based on historical data, suggests a robust future performance. With the majority of simulations yielding positive returns and a median projected increase of 342.1%, there's a strong indication of the portfolio's capacity to grow wealth over time. However, it's crucial to remember that such simulations are based on past trends, which do not guarantee future results.

Asset classes Info

  • Stocks
    74%
  • Bonds
    25%
  • Cash
    1%

The asset allocation—74% in stocks and 25% in bonds—provides a balanced exposure that caters to a moderate risk tolerance. This blend aims to capture the growth potential of equities while using bonds to mitigate volatility. The minimal cash holding keeps the portfolio fully invested, a strategy that typically offers better long-term returns than holding significant cash reserves.

Sectors Info

  • Technology
    24%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Industrials
    7%
  • Health Care
    6%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

The sectoral distribution shows a heavy emphasis on technology, financial services, and consumer cyclicals, reflecting a growth-oriented strategy. This concentration in sectors that can exhibit higher volatility but also offer substantial growth opportunities is balanced by investments in more stable areas like healthcare and consumer defensive. This sector balance supports the portfolio's aim to achieve growth while managing risk.

Regions Info

  • North America
    52%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America, with significant allocations in developed Europe and emerging Asian markets. This distribution enhances global diversification, reducing the risk tied to any single market. However, the limited exposure to emerging markets outside of Asia and the underrepresentation of regions like Latin America and Africa/Middle East might limit potential growth opportunities in these high-growth areas.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    22%
  • Mid-cap
    11%
  • Small-cap
    2%
  • Micro-cap
    1%

The focus on mega and big-cap companies, constituting 61% of the portfolio, underscores a preference for stability and lower volatility associated with larger, well-established firms. While this can lead to more consistent returns, diversifying further into medium, small, and micro-cap stocks could potentially increase growth prospects, albeit with higher risk.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The high correlation between the Schwab U.S. Large-Cap Growth ETF and the Vanguard Total Stock Market Index Fund ETF Shares indicates overlapping investments that may not significantly enhance diversification. Reducing exposure to similar assets can help in optimizing the portfolio's risk-return profile by ensuring each investment contributes uniquely to the portfolio's performance.

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 asset allocation and composition suggest a balance between growth potential and risk management. However, optimization could involve reassessing the overlap in equity investments to enhance diversification without compromising the portfolio's overall risk profile. Adjusting allocations based on an Efficient Frontier analysis could further improve the risk-return ratio, ensuring the portfolio is positioned for optimal performance within the investor's risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.80%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Weighted yield (per year) 1.90%

The overall dividend yield of 1.90% provides an additional income stream, contributing to the portfolio's total return. While the focus on growth-oriented assets may lead to a lower yield compared to more income-focused investments, the dividends from the bond and international ETFs offer a steady income, complementing the growth achieved through capital appreciation.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

With an average Total Expense Ratio (TER) of 0.04%, the portfolio benefits from low investment costs, enhancing net returns over time. This cost efficiency is crucial for long-term growth, as even small differences in fees can significantly impact compounded returns. The selection of low-cost ETFs demonstrates a strategic approach to maximizing investor returns by minimizing expense drag.

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