Globally diversified two fund equity portfolio with low costs and balanced long term risk profile
Report created on May 30, 2026Risk profile
4/7
Diversification profile
4/5
Positions
-
VT VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES
VTIAX - US9219098186 50.00% -
VT Vanguard Total Stock Market Index Fund Admiral Shares
VTSAX - US9229087286 50.00%
This portfolio is built from just two broad equity index funds split 50/50 between US stocks and international stocks. That makes the structure extremely simple while still covering nearly the entire global stock market. A “buy and hold” approach without rebalancing means the mix will slowly drift as one region outperforms another, so the 50/50 balance may change over time. A balanced risk score of 4/7 reflects that it is fully invested in shares, which can swing in value, but spread across thousands of companies. Overall, the composition is straightforward, globally oriented, and easy to understand.
Growth
From mid‑2016 to late‑May 2026, a $1,000 investment in this portfolio grew to about $3,311. That works out to a compound annual growth rate (CAGR) of 12.76%, which is like averaging that return each year over the whole period. This slightly trailed the broad global market and more noticeably lagged the US market, which had a particularly strong decade. The maximum drawdown of about ‑34% during early 2020 shows that the portfolio can still fall sharply in crises, similar to major benchmarks. As always, past performance shows how it behaved before but doesn’t guarantee future results.
Projection
The Monte Carlo projection uses the portfolio’s historical ups and downs to simulate many possible 15‑year paths. Think of it as running 1,000 alternate timelines where returns are shuffled according to past patterns. The median outcome ends around $2,791 from $1,000, with a wide but realistic range from about $931 to $7,663 in the 5–95% band. The average simulated annual return of 8.15% is lower than the historical figure, which is common when including many weaker paths. These simulations highlight uncertainty: results cluster around growth but can vary a lot, so the numbers are guides, not promises.
Asset classes
- Stocks 100%
All of the portfolio is in stocks, with 0% in bonds or cash. That means it is focused entirely on growth assets rather than income or capital‑preservation assets. A 100% equity allocation tends to offer higher long‑term return potential but also larger and more frequent short‑term declines. Compared with many “balanced” mixes that include bonds, this structure leans more toward equity risk, even though it’s diversified within stocks. The balanced risk rating here reflects diversification within the equity bucket, not a mix of different asset classes. So behavior will be closely tied to global stock market cycles.
Sectors
- Technology 25%
- Financials 17%
- Industrials 13%
- Consumer Discretionary 9%
- Health Care 8%
- Telecommunications 8%
- Consumer Staples 5%
- Basic Materials 5%
- Energy 5%
- Utilities 3%
- Real Estate 3%
Sector exposure is broadly spread, with technology the largest at 25%, followed by financials, industrials, and consumer‑oriented areas. No single sector dominates to an extreme degree, and the mix looks quite similar to broad global equity benchmarks. This alignment is helpful because it avoids heavy bets on any one part of the economy. Tech‑heavy weights can still mean more sensitivity to interest rates and innovation cycles, while financials respond more to credit and economic growth trends. Overall, though, the sector composition is well‑balanced and matches common market standards, supporting broad economic diversification.
Regions
- North America 54%
- Europe Developed 18%
- Japan 8%
- Asia Developed 7%
- Asia Emerging 7%
- Australasia 2%
- Africa/Middle East 2%
- Latin America 1%
Geographically, the portfolio has about 54% in North America and 46% spread across Europe, Japan, developed Asia, emerging Asia, Australasia, Africa/Middle East, and Latin America. That’s quite close to the global equity market’s regional weights, so it doesn’t heavily favor or ignore any major region. This alignment is beneficial because it reduces reliance on one economy or currency and lets the portfolio participate in growth across both developed and emerging markets. At the same time, the North American tilt means results are still influenced a lot by that region’s corporate earnings, interest rates, and policy decisions.
Market capitalization
- Mega-cap 43%
- Large-cap 30%
- Mid-cap 18%
- Small-cap 5%
- Micro-cap 1%
The market cap breakdown is dominated by mega‑ and large‑cap companies, which together make up about 73% of the portfolio. Mid‑caps add another 18%, while small‑ and micro‑caps make up a modest slice. This pattern mirrors the global equity market, where the biggest companies naturally carry the most weight. Larger firms often have more stable earnings and deeper liquidity, which can mean somewhat smoother trading, while smaller firms can be more volatile but sometimes grow faster. The blend here offers broad exposure with a gentle tilt toward stability rather than an aggressive bet on smaller, more volatile companies.
Factors
Factor exposure is mostly neutral across value, size, momentum, and quality, meaning it behaves similarly to the broad market on those dimensions. Factor exposure is just a way of describing how much the portfolio leans into traits like “cheap vs. expensive” (value) or “large vs. small” (size). The main notable tilts here are a high low‑volatility score and a low yield score. A higher low‑volatility tilt suggests the holdings are, on average, slightly steadier than the overall market, which can soften some swings. The lower yield simply reflects that many companies reinvest rather than pay out higher dividends.
Risk contribution
-
Vanguard Total Stock Market Index Fund Admiral Shares
Weight: 50.00% 53.9% -
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES
Weight: 50.00% 46.1%
Risk contribution shows how much each fund drives the portfolio’s overall ups and downs, which can differ from its simple weight. Even though the two funds are each 50% of the portfolio, the US total market fund contributes about 54% of the risk, while the international fund contributes about 46%. That small tilt means US stocks have been a bit more influential in driving volatility. This pattern is common when one region tends to move more sharply or is more correlated with major events. Still, the near‑even split in both weight and risk contribution keeps risk reasonably well spread between the two building blocks.
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 efficient frontier analysis shows the current mix sits on or very close to the curve of best possible risk‑return combinations using these two funds. The Sharpe ratio, which measures return earned per unit of volatility above a risk‑free rate, is 0.56 for the current portfolio. The minimum‑variance and maximum‑Sharpe portfolios have slightly different mixes and Sharpe ratios (0.63 and 0.8), but the difference in risk is modest. Being on or near the frontier means that, given only these two holdings, the current allocation already uses them in an efficient way for its chosen risk level.
Dividends
- VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 2.60%
- Vanguard Total Stock Market Index Fund Admiral Shares 1.00%
- Weighted yield (per year) 1.80%
The overall dividend yield is about 1.8%, coming from roughly 2.6% on international stocks and 1.0% on US stocks. Dividend yield is simply the annual cash payout as a percentage of the current value. This level is typical for broad global equity portfolios and suggests most of the total return historically has come from price growth rather than income. Dividends still play a role by providing a steady cash component that can be reinvested or withdrawn, but they are not the main driver here. For an all‑stock, growth‑oriented portfolio, this yield is broadly in line with global norms.
Ongoing product costs
- VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.09%
- Vanguard Total Stock Market Index Fund Admiral Shares 0.04%
- Weighted costs total (per year) 0.06%
The portfolio’s total expense ratio (TER) is very low at about 0.06% per year, combining 0.04% and 0.09% from the two funds. TER is the annual fee charged by the funds, expressed as a percentage of the invested amount. Costs at this level are impressively low and compare very favorably with the broader fund universe. Over long periods, small differences in fees compound and can noticeably affect final outcomes, so starting from a low‑cost base is a big advantage. Here, costs are doing exactly what they should: staying in the background and letting market returns drive performance.
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