A balanced portfolio with strong U.S. focus and moderate international exposure

Report created on Mar 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards U.S. equities, with 70% in the Vanguard S&P 500 ETF, 20% in international stocks, and 10% in bonds. This mix aligns with a balanced risk profile, offering growth potential through equities while maintaining some stability with bonds. Compared to a typical benchmark, it leans more towards equities, which may increase potential returns but also risk. To further align with a balanced profile, consider slightly increasing bond exposure. This could help cushion against equity market volatility, especially during economic downturns.

Growth Info

Historically, this portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 11.19%. This rate indicates strong growth compared to many benchmarks. However, with a maximum drawdown of -31.56%, it has also experienced significant volatility. Such drawdowns highlight the inherent risk in equity-heavy portfolios. Analyzing past performance helps understand potential future volatility, but it's important to remember that past performance doesn't guarantee future results. To mitigate future drawdowns, consider increasing diversification, especially in more stable assets.

Projection Info

Using Monte Carlo simulations, this portfolio's future performance was projected, with 1,000 simulations showing a median return of 149.4%. This method uses historical data to estimate potential outcomes, though it's important to note that such projections are not guarantees. The simulation suggests a high likelihood of positive returns, with 957 simulations showing gains. However, the range of outcomes also reflects potential risks. To enhance future performance, consider regular reviews and adjustments based on changing market conditions and personal goals.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The allocation across asset classes is primarily in equities (89%) and bonds (10%), with minimal cash holdings. This allocation suggests a focus on growth, typical for balanced portfolios, but it also implies higher risk due to equity market exposure. Compared to benchmarks, it has a lower bond allocation, which might reduce stability. To enhance diversification, consider increasing the bond allocation slightly. This could provide a buffer during equity market downturns, offering a more balanced risk-return profile.

Sectors Info

  • Technology
    26%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology (26%), followed by financial services (14%) and consumer cyclicals (10%). This tech-heavy focus may lead to higher volatility, especially during periods of interest rate changes or tech sector downturns. Compared to typical benchmarks, this concentration suggests a growth-oriented stance. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like energy or utilities. This could help stabilize returns and reduce reliance on any single sector's performance.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America (71%), with limited exposure to other regions. This U.S. concentration aligns with many investors' home bias but may limit benefits from global diversification. Compared to global benchmarks, it underweights regions like Europe and emerging markets. Increasing international exposure could enhance diversification and potentially capture growth in other regions. Consider gradually increasing allocations to underrepresented areas to balance geographic risks and opportunities.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap (42%) and big-cap (30%) stocks, with minimal exposure to small and micro-cap stocks. This large-cap focus suggests a preference for stability and established companies, which often offer lower volatility. However, it may miss out on the growth potential of smaller companies. To diversify further, consider increasing exposure to small and medium-cap stocks. This could introduce new growth opportunities and enhance overall portfolio 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 can potentially be optimized using the Efficient Frontier, which seeks the best risk-return ratio with the current assets. This involves adjusting allocations to achieve the most efficient balance of risk and return. While the current allocation is relatively efficient, slight adjustments could further enhance performance. Consider using optimization tools to explore different allocation scenarios. This approach focuses on maximizing returns for a given level of risk, rather than just diversifying broadly.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.90%

The portfolio's dividend yield is 1.90%, with significant contributions from the bond and international stock ETFs. Dividends can provide a steady income stream and contribute to total returns, particularly in low-growth environments. Compared to other balanced portfolios, this yield is moderate, reflecting a focus on growth rather than income. To increase income potential, consider adding higher-yielding assets or dividend-focused funds. This could enhance returns, especially during periods of market stagnation.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of 0.04%. Low costs are beneficial as they help improve long-term returns by minimizing the drag on performance. Compared to many actively managed funds, these costs are significantly lower, supporting better net returns. Maintaining this cost efficiency is advantageous, but it's also important to regularly review fund fees. Ensure that any changes or additions to the portfolio maintain or improve this cost efficiency.

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