A balanced and broadly diversified portfolio focusing on global stock markets with low costs

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with a moderate risk tolerance and a long-term investment horizon. It is designed for individuals who prioritize capital appreciation while maintaining a level of stability through broad diversification across major sectors and geographies, primarily within the stock market. This strategy is ideal for those comfortable with the inherent volatility of equity investments but who also appreciate the potential for higher returns that stocks offer over the long term.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    75.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    25.00%

This portfolio primarily comprises two Vanguard ETFs, allocating 75% to the Total Stock Market Index Fund and 25% to the Total International Stock Index Fund. This structure indicates a strong preference for equities, with a 99% allocation towards stocks and a minimal cash reserve. The heavy tilt towards the Total Stock Market Index Fund suggests a significant bias towards U.S. equities, given its 77% North American geographic exposure. This composition aligns with a balanced risk profile, aiming to capture global market growth while maintaining a substantial home country bias.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 11.76%, with a maximum drawdown of -34.68%. This performance, characterized by significant growth and moderate volatility, aligns with the expectations for a balanced portfolio. The days contributing to 90% of returns being concentrated in just 25 days highlights the impact of short-term market movements on overall performance. This historical data underscores the importance of staying invested over the long term to capture key market gains.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential growth for this portfolio. With a median projected growth of 244.2% and 968 out of 1,000 simulations showing positive returns, the forward-looking outlook remains optimistic. However, it's crucial to remember that these simulations are based on past performance, which is not a reliable indicator of future results. This analysis helps in understanding potential volatility and the importance of risk tolerance in investment planning.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's nearly exclusive focus on stocks, with a minor allocation to cash, reflects a growth-oriented strategy. This single-asset class concentration increases exposure to market volatility but also offers higher growth potential over the long term. Diversification across different asset classes could provide a buffer against stock market fluctuations, suggesting an area for potential adjustment depending on risk tolerance.

Sectors Info

  • Technology
    25%
  • Financials
    17%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation within the portfolio is well-diversified, covering technology, financial services, healthcare, and more, with technology being the most significant at 25%. This sectoral spread helps mitigate risk by not overexposing the portfolio to the cyclical nature of any single industry. However, the heavy weighting in technology, a sector known for its volatility, could influence the portfolio's overall risk profile.

Regions Info

  • North America
    77%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America (77%), with a modest allocation to international markets. This geographic distribution supports broad global exposure while leveraging the growth potential of the U.S. market. However, the limited exposure to emerging markets and certain developed regions might limit diversification benefits and exposure to global growth opportunities.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization breakdown—42% mega, 30% big, 19% medium, 6% small, and 2% micro—indicates a conservative approach, favoring large, well-established companies. This allocation can offer stability and lower volatility but might also limit potential high-growth opportunities found in smaller caps.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.70%

The dividend yields of 1.30% for the Total Stock Market Index Fund and 2.90% for the Total International Stock Index Fund, averaging a total yield of 1.70%, contribute to the portfolio's total return. This income can provide a steady cash flow and help mitigate volatility, making it a crucial component for investors seeking both growth and income.

Ongoing product costs Info

  • 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) 0.04%

With a total portfolio expense ratio (TER) of 0.04%, the costs associated with this portfolio are impressively low. Lower costs can significantly enhance long-term returns by minimizing the drag on performance. This efficient cost structure is a strong advantage, allowing more of the investment's return to contribute to wealth accumulation.

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.

The portfolio's current allocation suggests a well-considered balance between risk and return, as implied by its alignment with the Efficient Frontier concept. This balance indicates that the portfolio is positioned to achieve the best possible return for the given level of risk. However, ongoing monitoring and rebalancing are essential to maintain this optimization, especially in response to changing market conditions and personal investment goals.

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