A focused portfolio with total stock market exposure and low diversification

Report created on Jan 26, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio consists solely of the Vanguard Total Stock Market Index Fund ETF, representing a 100% allocation to U.S. stocks. While this offers comprehensive exposure to the entire U.S. equity market, it lacks diversification across other asset classes like bonds or international stocks. This concentration can lead to increased volatility, as it relies entirely on the performance of U.S. equities. A balanced portfolio typically includes a mix of asset classes to reduce risk. To enhance diversification, consider adding assets from different classes or regions to mitigate potential market downturns.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.97%. This means that, on average, the investment grew by nearly 14% each year. However, it experienced a significant maximum drawdown of -34.97%, indicating substantial temporary losses during market downturns. While past performance is strong, it's crucial to remember that it doesn't guarantee future results. Comparing this to a benchmark like the S&P 500 can provide context, as similar index funds have shown comparable trends. Consider this volatility when assessing your risk tolerance.

Projection Info

The forward projection uses a Monte Carlo simulation, which ran 1,000 scenarios to estimate potential future outcomes based on historical data. The median forecast suggests a 492.5% increase, but results vary widely, with a 5th percentile outcome of 80.4% and a 67th percentile of 677.4%. While the simulation indicates a high likelihood of positive returns, with 997 out of 1,000 scenarios showing gains, it's important to note that these projections are based on past data and assumptions. They provide a range of possible outcomes, but actual future performance may differ due to unforeseen factors.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely allocated to stocks, with no exposure to other asset classes such as bonds or cash. This lack of diversification can lead to increased risk, as the portfolio's performance is tied solely to the stock market's fluctuations. Diversifying across multiple asset classes can help mitigate risk by providing a buffer during market downturns. Consider incorporating fixed-income investments or alternative assets to balance the portfolio and reduce volatility. This approach can enhance stability and potentially improve risk-adjusted returns over the long term.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    5%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    2%
  • Basic Materials
    2%

Sector allocation is heavily skewed towards technology, which makes up 32% of the portfolio. Other sectors like financial services, consumer cyclicals, and healthcare have smaller allocations. This tech-heavy concentration could lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. While technology has been a strong performer, it's essential to maintain a balanced sector distribution to mitigate sector-specific risks. Consider diversifying into other sectors to achieve a more balanced portfolio that aligns with broader market benchmarks.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is entirely concentrated in North America, specifically the U.S. This lack of international exposure limits the benefits of geographic diversification, which can reduce risk by spreading investments across different economic regions. Global diversification can help mitigate the impact of regional economic downturns and currency fluctuations. Consider incorporating international equities or funds to enhance diversification and potentially capture growth opportunities in other parts of the world.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    31%
  • Mid-cap
    20%
  • Small-cap
    6%
  • Micro-cap
    2%

The market capitalization distribution leans heavily towards mega and large-cap stocks, with 41% and 31% allocations, respectively. Medium-cap stocks account for 20%, while small and micro-cap stocks make up only 8%. This bias towards larger companies can provide stability but may limit growth potential compared to smaller, more dynamic firms. While large-cap stocks are generally less volatile, adding more small and mid-cap exposure can enhance growth opportunities and diversification, potentially leading to better risk-adjusted returns.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.20%

The portfolio's dividend yield is 1.20%, which contributes to total returns through regular income. While not particularly high, dividends can provide a stable income stream, especially during periods of market volatility. For investors seeking income, focusing on dividend-paying stocks or funds could enhance cash flow. However, it's important to balance this with growth opportunities to ensure the portfolio aligns with long-term goals. Consider reinvesting dividends to compound returns over time, enhancing overall portfolio performance.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.03%. This is impressively low and supports better long-term performance, as minimizing fees can significantly enhance net returns. Low-cost investments are a crucial component of an efficient portfolio, as they allow more of your money to work for you. Maintaining this cost advantage is beneficial, but it's also important to ensure that any additional investments or changes to the portfolio don't introduce higher fees that could erode returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey