Balanced and broadly diversified portfolio with a strong focus on US equities and low costs
Report created on May 28, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 60.00% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 20.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00%
The portfolio is comprised of three Vanguard ETFs, with a heavy emphasis on US equities (80%) through the Vanguard Total Stock Market Index Fund ETF Shares and Vanguard S&P 500 ETF. The remaining 20% is allocated to international stocks via the Vanguard Total International Stock Index Fund ETF Shares. This structure suggests a balanced approach to diversification, leveraging the broad exposure of the total stock market while also capturing the performance of top US companies through the S&P 500. The international component introduces global diversification, albeit with a smaller weighting.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 12.14%, with a maximum drawdown of -34.58%. These figures indicate a strong performance relative to the inherent risks. The days contributing to 90% of returns being limited to 26 highlight the impact of significant market movements on the portfolio's performance. Comparing this to benchmark indices could provide further insight into relative performance during different market phases.
Projection
Forward projections, based on 1,000 Monte Carlo simulations, suggest a wide range of possible outcomes, from a 31.0% increase at the 5th percentile to a 474.0% increase at the 67th percentile. The median projected outcome shows a 320.5% increase, with 97.6% of simulations resulting in positive returns. This indicates a high probability of future gains, though it's important to remember that these projections are based on historical data and cannot guarantee future performance.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's asset allocation is heavily skewed towards stocks (99%), with a minimal cash holding (1%). This allocation is indicative of a growth-oriented strategy, relying predominantly on equity investments for returns. The lack of fixed income or alternative investments limits the portfolio's ability to hedge against stock market volatility, which could be a consideration for adjusting risk exposure.
Sectors
- Technology 27%
- Financials 16%
- Health Care 11%
- Consumer Discretionary 10%
- Industrials 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 3%
- Real Estate 3%
- Utilities 3%
Sector allocation is led by Technology (27%), Financial Services (16%), and Healthcare (11%), closely mirroring the sector weightings of major indices like the S&P 500. This sectoral distribution supports growth but also exposes the portfolio to sector-specific risks, such as regulatory changes in Healthcare or market corrections in the Technology sector.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
Geographic exposure is predominantly North American (81%), with modest allocations to developed Europe (8%) and emerging Asian markets (3%). This geographic distribution underscores a strong home bias, potentially limiting exposure to global growth opportunities and diversification benefits, especially in emerging markets.
Market capitalization
- Mega-cap 43%
- Large-cap 31%
- Mid-cap 19%
- Small-cap 5%
- Micro-cap 1%
The portfolio's market capitalization breakdown shows a preference for Mega (43%) and Big (31%) cap stocks, with lesser exposure to Medium (19%), Small (5%), and Micro (1%) caps. This indicates a conservative tilt towards larger, more established companies, likely reducing volatility but also possibly capping higher growth opportunities found in smaller caps.
Redundant positions
-
High correlationVanguard Total Stock Market Index Fund ETF SharesVanguard S&P 500 ETF
The high correlation between the Vanguard Total Stock Market Index Fund ETF Shares and the Vanguard S&P 500 ETF indicates overlapping exposures, which could limit diversification benefits. This redundancy suggests an opportunity to reassess the allocation to these funds to potentially enhance portfolio efficiency without significantly altering the risk profile.
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.
Given the portfolio's current composition and the high correlation between some of its assets, there's room for optimization towards achieving a more efficient risk-return profile. Exploring diversification beyond highly correlated US equity ETFs could enhance returns without proportionately increasing risk, aligning the portfolio more closely with the Efficient Frontier.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Vanguard Total International Stock Index Fund ETF Shares 2.90%
- Weighted yield (per year) 1.62%
The portfolio's dividend yield stands at 1.62%, with the international component offering a higher yield (2.90%) compared to the domestic ETFs (1.30%). While dividends contribute to the total return, the portfolio's growth focus means that dividend income is a secondary consideration. Investors should evaluate their income needs against the potential for capital appreciation.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- 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) 0.03%
The portfolio benefits from low costs, with Total Expense Ratios (TER) of 0.03% for the domestic ETFs and 0.05% for the international ETF. These low costs are crucial for long-term growth, as they minimize the drag on returns, ensuring more of the portfolio's gains are retained by the investor.
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