A balanced portfolio with a strong emphasis on U.S. equities and growth potential

Report created on Mar 26, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted toward U.S. equities, with a significant portion allocated to large-cap stocks through funds like the Vanguard S&P 500 ETF and individual holdings such as Costco. The inclusion of the Vanguard Target Retirement 2050 Fund provides a diversified mix of assets, albeit with a focus on growth. Compared to a typical balanced benchmark, this portfolio leans towards equities, which may increase volatility but also the potential for higher returns. Consider whether this equity-heavy approach aligns with your risk tolerance and investment goals, and explore adding more fixed-income or international assets for broader diversification.

Growth Info

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 13.26%. This indicates strong growth over time, especially when compared to broader market indices. However, it also experienced a maximum drawdown of -35.61%, highlighting potential volatility. While past performance provides some context, it is not a guarantee of future results. To mitigate drawdowns, consider diversifying further or incorporating defensive assets, especially if approaching a shorter investment horizon or lower risk tolerance.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median return of 716.5%. This method uses historical data to estimate future performance, but it's important to remember that such projections are not foolproof. They provide a range of possibilities rather than certainties. If the portfolio's expected return and risk profile align with your financial goals, maintain the current strategy. Otherwise, consider rebalancing to adjust the risk-return trade-off.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio's asset allocation is predominantly in stocks, making up 94% of the total, with minimal exposure to bonds and cash. This allocation suggests a focus on capital appreciation rather than income generation or capital preservation. While this may suit long-term growth objectives, it can increase portfolio volatility. To enhance diversification and reduce risk, consider increasing the allocation to bonds, which can provide stability and income, especially during market downturns.

Sectors Info

  • Technology
    24%
  • Consumer Staples
    14%
  • Financials
    12%
  • Telecommunications
    11%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Discretionary
    6%
  • Consumer Discretionary
    4%
  • Utilities
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%

The sector allocation is diverse, with a notable emphasis on technology at 24%, followed by consumer defensive and financial services. This distribution aligns with common growth strategies but may lead to higher volatility, particularly if interest rates rise or tech stocks face headwinds. Ensuring a balance across various sectors can mitigate sector-specific risks. Consider whether the current sector focus supports your investment objectives or if adjustments are needed for better balance.

Regions Info

  • North America
    82%
  • Europe Developed
    8%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily skewed towards North America, with 82% exposure, while other regions like Europe and Asia have minimal representation. This concentration can limit the benefits of global diversification, potentially increasing vulnerability to U.S. market fluctuations. To capture growth opportunities and reduce geographic risk, consider increasing exposure to international markets, particularly emerging economies, which may offer higher growth potential.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    24%
  • Mid-cap
    14%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio is dominated by mega-cap stocks, comprising 48% of the total, which can offer stability and established growth. However, smaller-cap stocks, which make up a smaller portion, can provide higher growth potential but come with increased risk. Balancing market capitalization exposure can enhance diversification and tap into different growth dynamics. Consider whether the current focus aligns with your risk tolerance and growth expectations or if adjustments are necessary.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard S&P 500 ETF and the Vanguard Growth Index Fund ETF Shares. High correlation means these assets tend to move together, limiting diversification benefits during market downturns. To improve diversification, consider reducing exposure to overlapping assets and incorporating investments with lower correlation, which can help smooth returns and reduce overall portfolio risk.

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 be optimized using the Efficient Frontier approach, which seeks the best risk-return ratio. Currently, overlapping assets may dilute diversification benefits, suggesting room for improvement. By adjusting allocations among existing assets, the portfolio could achieve higher expected returns without increasing risk. Explore rebalancing strategies to ensure the portfolio is positioned on the Efficient Frontier, maximizing potential returns relative to the level of risk taken.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Costco Wholesale Corp 0.50%
  • Meta Platforms Inc. 0.30%
  • Schwab U.S. Dividend Equity ETF 2.90%
  • Vanguard FTSE Europe Index Fund ETF Shares 1.70%
  • Vanguard S&P Small-Cap 600 Growth Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard Utilities Index Fund ETF Shares 2.30%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • Weighted yield (per year) 0.64%

The portfolio's dividend yield is modest at 0.64%, with contributions from ETFs like the Schwab U.S. Dividend Equity ETF and individual stocks like Costco. While dividends provide a steady income stream, this portfolio's focus is more on capital growth. If income generation is a priority, consider increasing exposure to higher-yielding assets. Alternatively, if growth remains the primary goal, maintaining the current yield may suffice.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard FTSE Europe Index Fund ETF Shares 0.13%
  • Vanguard S&P Small-Cap 600 Growth Index Fund ETF Shares 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Utilities Index Fund ETF Shares 0.10%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.03%. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Keeping costs low is crucial, as even small fee reductions can significantly impact wealth accumulation over time. Continue to monitor and manage expenses, ensuring they remain aligned with your investment strategy and do not erode returns unnecessarily.

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