A balanced investment strategy emphasizing value stocks with significant US and modest global exposure

Report created on Sep 26, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard Value Index Fund ETF Shares, making up 85% of the allocation, with the remaining 15% in the Vanguard FTSE All-World ex-US Index Fund ETF Shares. This composition indicates a strong preference for value stocks, primarily within the US, given the high allocation to a domestic value index. The minimal allocation to international stocks suggests a conservative approach to global diversification. The portfolio's heavy tilt towards value stocks and underweight in international exposure might reflect an investment strategy focused on seeking undervalued companies in stable, developed markets.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 12.48%, with a maximum drawdown of -36.47%. The performance data shows a portfolio that has navigated market cycles with resilience, delivering solid returns. However, the significant drawdown highlights periods of market stress where the portfolio's value orientation may have been out of favor. The concentration in value stocks, while beneficial in certain market conditions, underscores the importance of understanding the cyclical nature of investment styles.

Projection Info

Monte Carlo simulations, using historical data to project future outcomes, suggest a wide range of potential portfolio performances. With key percentiles at 30.2% (5th), 298.0% (50th), and 438.2% (67th), and an annualized return across all simulations at 11.83%, the projections indicate a likelihood of positive growth. However, it's crucial to recognize that these simulations are based on past data and cannot predict future market conditions with absolute certainty. The high percentage of simulations with positive returns (989 out of 1,000) does provide a measure of confidence in the portfolio's resilience.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is nearly entirely in stocks (99%), with a nominal holding in cash (1%). This allocation underscores a growth-oriented strategy but also highlights a higher risk profile due to the lack of diversification across asset classes. Incorporating a broader range of asset classes, such as bonds or real estate, could provide additional income streams and risk mitigation, especially during periods when the equity market is underperforming.

Sectors Info

  • Financials
    25%
  • Industrials
    14%
  • Health Care
    14%
  • Technology
    11%
  • Consumer Staples
    10%
  • Energy
    7%
  • Consumer Discretionary
    6%
  • Utilities
    5%
  • Telecommunications
    4%
  • Basic Materials
    4%
  • Real Estate
    3%

The sectoral distribution within the portfolio is well-diversified across financial services, industrials, healthcare, and technology, among others. This diversification helps mitigate sector-specific risks and capitalizes on growth opportunities across the economy. However, the heavy weighting in financial services (25%) and industrials (14%) may reflect a bias towards sectors traditionally favored by value investors. Monitoring sector performance and rebalancing as necessary can ensure the portfolio remains aligned with market opportunities and risk tolerance.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America (86%), with modest allocations to developed Europe (6%) and emerging and developed Asia. This geographic concentration in the US and underrepresentation of emerging markets and other developed regions may limit exposure to global growth trends and diversification benefits. Considering a more balanced global allocation could potentially enhance returns and reduce volatility over the long term.

Market capitalization Info

  • Large-cap
    50%
  • Mid-cap
    29%
  • Mega-cap
    20%

The market capitalization breakdown shows a preference for large (50%) and mega-cap (20%) companies, with a notable absence of small and micro-cap stocks. This allocation strategy favors stability and lower volatility associated with larger, established companies but may miss out on the higher growth potential of smaller firms. Introducing a measured exposure to small and micro-cap stocks could offer additional growth opportunities and further diversification.

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 using the Efficient Frontier suggests there may be opportunities to adjust the asset allocation to achieve a better risk-return ratio. While the current composition has performed well historically, revisiting the balance between domestic value stocks and international exposure, as well as diversifying across more asset classes and sectors, could potentially offer improved efficiency. This optimization process aims to fine-tune the portfolio to achieve the highest possible returns for a given level of risk.

Dividends Info

  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.80%
  • Vanguard Value Index Fund ETF Shares 2.10%
  • Weighted yield (per year) 2.20%

The dividend yields from the two ETFs, at 2.80% for the Vanguard FTSE All-World ex-US Index Fund ETF Shares and 2.10% for the Vanguard Value Index Fund ETF Shares, contribute to a total portfolio yield of 2.20%. This steady income stream is a positive aspect of the portfolio, particularly for investors seeking regular income alongside capital appreciation. Maintaining a focus on dividend-yielding investments can provide a cushion during market volatility and contribute to long-term returns.

Ongoing product costs Info

  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.04%

With exceptionally low total expense ratios (TER) of 0.07% and 0.04% for the international and value ETFs, respectively, the portfolio benefits from minimal costs, maximizing the potential for net returns. Keeping investment costs low is crucial for enhancing long-term portfolio growth, and this portfolio exemplifies cost-efficient investing. Regularly reviewing fund expenses and considering even lower-cost options as they become available can further optimize returns.

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