A balanced portfolio with broad market exposure and a strong focus on US equities

Report created on Jan 10, 2025

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 composed of three ETFs: Vanguard Total Stock Market (70%), Vanguard Total International Stock (20%), and Vanguard Total Bond Market (10%). This structure leans heavily towards equities, with a smaller allocation to bonds, reflecting a balanced approach. Compared to common benchmarks, this composition is typical for investors seeking growth with moderate risk. The heavy weighting in US equities suggests a focus on capital appreciation. To ensure alignment with personal goals, consider whether this allocation meets your risk tolerance and growth objectives.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.02%, demonstrating strong performance. However, it also experienced a maximum drawdown of -32.35%, indicating vulnerability during market downturns. This highlights the importance of balancing growth and risk. When compared to benchmarks, the performance is competitive, suggesting effective asset allocation. While past performance is not a guarantee of future results, it provides a useful context for evaluating the portfolio's resilience and potential for recovery.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, indicates a 50th percentile projection of 148.16% return over the investment horizon. This suggests a favorable outlook, with 926 out of 1,000 simulations showing positive returns. However, the 5th percentile projection of -8.18% underscores potential risks. While these projections offer valuable insights, it's crucial to remember that they are not certainties. Consider how these potential outcomes align with your financial goals and risk tolerance.

Asset classes Info

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

The portfolio's asset allocation includes 89.45% in stocks, 9.85% in bonds, and negligible amounts in other categories. This distribution suggests a strong focus on equity growth, with bonds providing some stability. Compared to typical balanced portfolios, this allocation is slightly more aggressive. While the stock-heavy approach may enhance growth potential, it can also increase volatility. Consider whether this balance aligns with your investment horizon and risk appetite, and adjust if necessary to ensure a comfortable risk-return profile.

Sectors Info

  • Technology
    24%
  • Financials
    14%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation shows a significant concentration in technology (24.17%), followed by financial services (13.59%) and healthcare (9.90%). This tech-heavy focus can lead to higher volatility, especially during periods of interest rate changes. Compared to benchmarks, the portfolio's sector distribution is well-diversified, reducing sector-specific risks. However, consider monitoring sector trends and potential overexposures. Balancing sector weights can help manage risk and capitalize on emerging opportunities across different industries.

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 exposed to North America (71.27%), with smaller allocations to Europe and Asia. This regional focus aligns with the strong performance of US markets but limits exposure to potentially high-growth regions like emerging markets. Compared to global benchmarks, this geographic allocation is more concentrated. Consider whether this aligns with your goals and risk tolerance. Diversifying geographically can enhance resilience against regional economic downturns and capture growth in diverse markets.

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 allocation could be optimized along the Efficient Frontier, which identifies the best risk-return balance. This optimization focuses on reallocating existing assets to achieve the highest possible return for a given level of risk. While the portfolio is well-structured, consider whether slight adjustments could enhance efficiency. This might involve tweaking stock and bond ratios or sector weights. Optimization should align with your risk tolerance and financial goals, ensuring the portfolio continues to meet your needs.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.96%

The portfolio offers a total dividend yield of 1.96%, with contributions from all three ETFs. Dividends provide a steady income stream, which can be particularly valuable during periods of market volatility. This yield is competitive and enhances the portfolio's total return potential. For investors seeking income, maintaining or increasing dividend exposure could be beneficial. However, ensure that dividend-focused strategies align with your broader investment goals and do not detract from growth opportunities.

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%

With a total expense ratio (TER) of 0.04%, the portfolio is cost-effective, minimizing the impact of fees on long-term returns. Low costs are crucial for maximizing growth, as they allow more of your investment to compound over time. Compared to industry averages, this TER is impressively low and supports efficient portfolio management. Continue to monitor costs and explore opportunities to reduce fees further, ensuring that they remain aligned with your investment strategy and objectives.

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