Balanced portfolio with heavy US exposure and low costs focusing on major stock indexes

Report created on Jun 8, 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 structured around three major Vanguard ETFs, allocating 50% to the S&P 500 ETF, 30% to the Total Stock Market Index Fund ETF, and 20% to the Total International Stock Index Fund ETF. This composition indicates a strong bias towards US equities, given the significant weight of the S&P 500 and Total Stock Market ETFs. The inclusion of the International Stock Index ETF adds a degree of global diversification, albeit the overall exposure remains predominantly North American. The choice of ETFs suggests a preference for broad market exposure over niche investment strategies or sectors.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 12.43%, with a maximum drawdown of -34.23%. These figures underline a robust growth trajectory tempered by significant volatility, as evidenced by the substantial drawdown. The days contributing to 90% of returns being concentrated in just 27.0 days highlights the impact of short-term, high-gain periods on overall performance. This historical performance, while impressive, underscores the importance of risk tolerance and the potential for wide fluctuations in portfolio value.

Projection Info

Utilizing a Monte Carlo simulation, which forecasts potential future outcomes based on historical data, the portfolio shows a wide range of possible performances. With a median projection of 313.2% growth and a 5th percentile at a modest 31.1% growth, the simulation suggests a generally positive outlook but with considerable variability. It's crucial to note, however, that such simulations are inherently speculative and cannot guarantee future results, serving instead as a tool for understanding potential risk and return dynamics.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is almost entirely in stocks (99%), with a minimal cash position (1%). This high concentration in equities is typical for growth-oriented investors seeking higher returns, albeit at the expense of higher volatility and risk. The absence of bonds or alternative investments limits the portfolio's ability to hedge against stock market downturns, making it more susceptible to fluctuations in equity markets.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    3%

Sectoral allocation is heavily weighted towards technology (27%), financial services (16%), and healthcare (11%), reflecting a common bias in broad market indices towards these high-growth areas. While this concentration can drive significant returns, it also exposes the portfolio to sector-specific risks, such as regulatory changes or market sentiment shifts. Diversifying across a broader range of sectors could mitigate some of these risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The geographic allocation is heavily skewed towards North America (81%), with modest exposure to developed Europe (8%) and emerging Asia (3%). This distribution reflects a conservative approach to international diversification, potentially limiting exposure to growth opportunities in emerging markets and other developed regions. Expanding the international component could enhance diversification and reduce the portfolio's vulnerability to regional economic cycles.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    32%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's exposure by market capitalization is concentrated in mega (45%) and big (32%) cap stocks, with lesser allocations to medium (18%), small (3%), and micro (1%) cap stocks. This bias towards larger companies is consistent with the portfolio's focus on broad market ETFs, which tend to be weighted towards the most valuable companies. Including more small and micro-cap stocks could offer higher growth potential, albeit with increased risk.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the Vanguard Total Stock Market Index Fund ETF Shares and the Vanguard S&P 500 ETF suggests redundancy in the portfolio, as these funds share a significant overlap in holdings. This redundancy dilutes the diversification benefits that different assets are supposed to provide. Reducing overlap by reallocating assets could enhance portfolio efficiency without necessarily increasing 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.

Optimizing the portfolio along the Efficient Frontier could enhance its risk-return profile. Currently, the high correlation between certain assets suggests an opportunity to improve diversification. By adjusting allocations to reduce overlap and potentially incorporating assets with lower correlations, the portfolio could achieve a more efficient balance between risk and return, aligning more closely with the investor's risk tolerance and return objectives.

Dividends Info

  • 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 an average of 1.62%, with the Total International Stock Index Fund ETF Shares offering a higher yield (2.90%) compared to the domestic ETFs (1.30%). While dividends contribute to total returns, the portfolio's growth is primarily driven by capital appreciation. Investors seeking higher income might consider increasing the allocation to higher-yielding assets or diversifying into dividend-focused funds.

Ongoing product costs Info

  • 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 exceptionally low costs, with Total Expense Ratios (TER) for the included ETFs ranging from 0.03% to 0.05%. These low costs are crucial for maximizing long-term returns, as they minimize the drag on performance. Investors should continue to prioritize cost efficiency when considering future adjustments or additions to the portfolio.

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