A balanced portfolio with strong diversification and low costs focused on global equities

Report created on Mar 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of 70% Vanguard Total Stock Market ETF, 20% Vanguard Total International Stock Index ETF, and 10% Vanguard Total Bond Market ETF. This structure leans heavily towards equities, providing substantial growth potential while maintaining a modest bond allocation for stability. Compared to a typical balanced benchmark, this portfolio has a slightly higher equity exposure. This composition is well-suited for investors seeking growth with a moderate level of risk. To maintain balance, consider periodically reviewing the allocation to ensure it aligns with your evolving risk tolerance and market conditions, adjusting as necessary.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 10.76%, indicating robust long-term performance. However, it experienced a maximum drawdown of -32.26%, reflecting the potential downside during market downturns. This performance compares favorably with many balanced benchmarks, showcasing its ability to generate returns over time. While past performance is not a guarantee of future results, understanding these trends can help set realistic expectations. Regularly reviewing historical performance can offer insights into how the portfolio might react in different market environments.

Projection Info

Using Monte Carlo simulations, which employ historical data to predict potential future outcomes, this portfolio shows a median projected growth of 138.9% over a set period. While 67% of simulations indicate a positive return, it's essential to remember that simulations are not forecasts. They provide a range of possible outcomes, helping investors understand potential risks and rewards. Although the projected annualized return is 7.20%, actual results may vary. Regularly revisiting projections can help adjust strategies in response to changing market conditions and personal investment goals.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset allocation consists of 89% stocks and 10% bonds, with 1% cash. This allocation provides a high level of diversification across asset classes, aligning closely with balanced portfolio norms. The significant equity exposure offers growth potential, while the bond component provides stability. Compared to typical balanced benchmarks, this allocation leans more towards equities, which may increase volatility but also potential returns. Ensuring that this allocation aligns with your risk tolerance is crucial. Consider adjusting the bond allocation if market conditions or personal circumstances change.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector-wise, the portfolio is heavily weighted towards technology at 25%, followed by financial services at 14%. This concentration in tech suggests potential volatility, especially during interest rate hikes or tech sector downturns. However, the broad sector diversification, covering 11 sectors, helps mitigate some risks. Compared to common benchmarks, this sector allocation is relatively balanced, offering exposure to various economic segments. Regularly monitoring sector performance and trends can inform adjustments, ensuring the portfolio remains well-positioned for future growth opportunities.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America at 71%, with smaller allocations in Europe and Asia. This focus on North America aligns with many global benchmarks but may limit exposure to emerging markets, which can offer higher growth potential. The geographic diversification helps reduce risk by spreading investments across different economies. However, consider whether increasing exposure to underrepresented regions aligns with your risk tolerance and investment goals. Staying informed about global economic conditions can guide geographic allocation decisions.

Market capitalization Info

  • Mega-cap
    37%
  • Large-cap
    28%
  • Mid-cap
    17%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio's market capitalization breakdown includes 37% in mega-cap stocks, 28% in big caps, and smaller allocations in medium, small, and micro caps. This distribution favors larger, more established companies, providing stability and reduced volatility. While this allocation mirrors many balanced benchmarks, it may limit exposure to the potentially higher returns of smaller companies. Regularly reviewing market cap exposure can help ensure it aligns with your risk tolerance and growth objectives. Adjusting allocations can optimize the balance between stability and growth potential.

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 can be optimized using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. This involves adjusting allocations to maximize returns for a given risk level. While the current allocation is well-balanced, exploring optimization can further enhance performance. The Efficient Frontier approach helps identify potential improvements without drastically altering the portfolio's composition. Regularly revisiting optimization strategies can ensure the portfolio remains aligned with changing risk tolerances and market conditions.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.88%

The portfolio's total dividend yield is 1.88%, with contributions from the bond and international stock ETFs being higher than the domestic stock ETF. Dividends provide a steady income stream, which can be reinvested to enhance long-term returns. For investors seeking both growth and income, this yield is a valuable component. Compared to similar portfolios, this yield is competitive, supporting the portfolio's overall return. Regularly reviewing dividend yields can help optimize income strategies and ensure they align with changing financial needs or market conditions.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • 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 total expense ratio (TER) is impressively low at 0.04%, thanks to the Vanguard ETFs' cost-efficiency. Low costs are crucial for enhancing long-term returns, as they reduce the drag on performance. Compared to industry averages, this TER is exceptionally competitive, supporting better net returns for investors. Maintaining a focus on cost-effective investments is a smart strategy for optimizing portfolio performance. Regularly reviewing and managing costs can ensure they remain aligned with your investment goals and provide maximum value.

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