A balanced portfolio with strong U.S. focus and low costs supporting steady growth

Report created on Dec 26, 2024

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 composed of three main funds: a U.S. large company fund (60%), a total international stock index fund (25%), and a small-cap value index fund (15%). This structure is typical for a balanced portfolio, with a significant emphasis on large U.S. companies. Compared to benchmark compositions, this allocation aligns well with a moderate risk profile, offering both domestic stability and international exposure. To enhance diversification, consider adding more asset classes like bonds or alternative investments, which can provide additional stability and income.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 11.47%, which is commendable. With a maximum drawdown of -35.15%, it demonstrates resilience during downturns, though volatility is present. Compared to benchmarks, this performance is robust, indicating the portfolio's ability to generate strong returns over time. However, past performance does not guarantee future results. To manage volatility, consider periodically rebalancing the portfolio to maintain the desired risk level and return potential.

Projection Info

Forward projections using Monte Carlo simulations indicate a median growth of 233.01% with a 10.47% annualized return. Monte Carlo simulations use historical data to assess potential future outcomes, providing a range of possibilities rather than exact predictions. While 957 out of 1,000 simulations show positive returns, uncertainty remains. It’s important to remember that these projections depend on past data and may not account for future market changes. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions and personal goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 99.29% of the total allocation. This high equity allocation suggests a focus on growth, which is typical for balanced to aggressive portfolios. Compared to benchmark norms, which often include a mix of bonds and other asset classes, this portfolio is less diversified in terms of asset classes. To mitigate risk, consider incorporating fixed-income investments, which can provide a buffer against market volatility and offer stable returns.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    4%
  • Utilities
    3%

Sector allocation shows a significant concentration in technology (24.25%), followed by financial services (15.98%) and industrials (11.29%). This distribution is well-aligned with common benchmarks, reflecting a balanced approach across key economic sectors. However, the tech-heavy nature may lead to increased volatility, especially during interest rate fluctuations. To ensure stability, consider monitoring sector trends and rebalancing if any sector becomes too dominant, maintaining a diverse and resilient portfolio.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic allocation is predominantly in North America (76.38%), with smaller exposures to Europe, Asia, and other regions. This concentration in North America aligns with the portfolio's focus on U.S. large companies. While this provides stability, it limits exposure to growth opportunities in emerging markets. To enhance diversification and capture global growth, consider increasing allocations to underrepresented regions. This can help balance risk and potentially enhance returns through geographic 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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve a more efficient balance. While the portfolio is already well-diversified, exploring optimization could enhance returns or reduce risk without necessarily changing the asset classes. It’s important to note that efficiency focuses on the risk-return trade-off and may not address other investment goals like income or capital preservation.

Dividends Info

  • U.S. LARGE COMPANY PORTFOLIO U.S. LARGE COMPANY PORTFOLIO 0.80%
  • VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL SHARES 1.40%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 3.30%
  • Weighted yield (per year) 1.52%

With a total dividend yield of 1.52%, the portfolio provides a modest income stream. The international fund contributes the highest yield at 3.3%, enhancing the overall income potential. Dividends can be an important component for investors seeking regular income, especially in low-interest-rate environments. To increase dividend income, consider reallocating to higher-yielding assets, balancing the need for income with growth potential and risk.

Ongoing product costs Info

  • U.S. LARGE COMPANY PORTFOLIO U.S. LARGE COMPANY PORTFOLIO 0.08%
  • VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL SHARES 0.07%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.12%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, minimizing the impact of costs on long-term returns. Low costs are crucial for maximizing net returns, as they reduce the drag on performance over time. Compared to industry averages, this portfolio is well-positioned for cost efficiency. Maintaining this low-cost structure is beneficial, but it's important to periodically review fund expenses to ensure they remain competitive and aligned with investment goals.

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