A balanced and diversified portfolio with strong focus on US equities and low costs

Report created on Mar 28, 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 composed of two primary ETFs: Vanguard Total Stock Market Index Fund ETF (70%) and Vanguard Total International Stock Index Fund ETF (30%). This structure provides a broad exposure to both U.S. and international equities. Compared to common benchmarks, this allocation is heavily weighted towards U.S. stocks, which can offer stability and growth potential. However, the limited number of asset classes may restrict diversification. To enhance diversification, consider incorporating other asset classes like bonds or real estate, which can help cushion the portfolio against equity market volatility.

Growth Info

Historically, the portfolio has demonstrated a strong performance with a Compound Annual Growth Rate (CAGR) of 11.06%. This impressive growth rate surpasses many common benchmarks, indicating effective asset allocation. The maximum drawdown of -34.57% highlights the potential risk during market downturns. While past performance is no guarantee of future results, the portfolio's ability to recover from declines suggests resilience. Consider maintaining this allocation if you are comfortable with the risk level, but be prepared for potential volatility.

Projection Info

The Monte Carlo simulation projects potential future outcomes using historical data, with 1,000 simulations resulting in a median return of 235.5%. While the simulation offers a glimpse into possible future performance, it relies on past data and cannot predict actual results. Given the high probability of positive returns (961 out of 1,000 simulations), the portfolio is well-positioned for future growth. However, remain cautious as market conditions can change. Regularly review and adjust your portfolio to align with your financial goals and risk tolerance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks (99%), with a minimal cash allocation (1%). This concentration in equities provides significant growth potential but also increases exposure to market volatility. Compared to diversified benchmarks, the lack of fixed income or alternative assets could lead to higher risk during market downturns. To enhance stability, consider integrating bonds or other asset classes. This diversification can help manage risk and provide more consistent returns over time.

Sectors Info

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

Sector allocation is well-distributed, with technology (25%) leading, followed by financial services (17%) and consumer cyclicals (11%). This spread across sectors aligns with common benchmarks, suggesting a well-balanced approach. However, tech-heavy portfolios may experience greater volatility during interest rate hikes. To mitigate this risk, consider rebalancing if any sector becomes disproportionately large. A diversified sector allocation can help smooth returns and reduce the impact of sector-specific downturns.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is predominantly North American (72%), with limited exposure to other regions. This focus aligns with U.S. market strength, but it may miss opportunities in emerging markets. Compared to global benchmarks, the portfolio has less exposure to Europe and Asia. To improve diversification, consider increasing international holdings, particularly in emerging markets. This can help reduce reliance on U.S. market performance and capture growth in other regions.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio is diversified across market capitalizations, with a strong emphasis on mega (42%) and big (31%) companies. This allocation provides stability and growth potential, as larger companies often have more resources and resilience. However, the limited exposure to small and micro-cap stocks may restrict growth opportunities. To enhance diversification, consider increasing allocations to smaller companies, which can offer higher growth potential but come with increased volatility.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This approach identifies the ideal allocation to achieve maximum returns for a given level of risk. While the current allocation is well-balanced, consider periodic rebalancing to maintain efficiency. Optimization does not guarantee diversification, so ensure your portfolio aligns with your broader financial goals and risk tolerance.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.54%

The portfolio's total dividend yield is 1.54%, with the Vanguard Total Stock Market ETF yielding 1.00% and the International ETF 2.80%. Dividends can provide a steady income stream and contribute to overall returns. For investors seeking income, this yield is moderate but could be enhanced by adding higher-yielding assets. Consider balancing growth and income by incorporating dividend-focused investments, which can offer additional stability and income potential.

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%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, reflecting the cost-efficiency of the Vanguard ETFs. Low costs are crucial for enhancing long-term returns, as they reduce the drag on performance. This cost structure aligns with best practices and supports better compounding over time. Continue to prioritize low-cost investments to maximize net returns. Regularly review expenses to ensure they remain competitive and aligned with your investment strategy.

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