A balanced portfolio with strong emphasis on US equities and low management costs

Report created on Aug 18, 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 distinctly structured with an 80% allocation in the Vanguard S&P 500 ETF and a 20% allocation in the Vanguard Total International Stock Index Fund ETF Shares. This composition indicates a strong preference for U.S. equities, given the S&P 500's focus, while still maintaining some international exposure to diversify risk. The allocation across just two ETFs simplifies management but also concentrates risk in the performance of these indices. Comparing this to a benchmark for balanced portfolios, the heavy tilt towards U.S. equities is notable, and the absence of direct allocations to bonds or alternative investments is unusual for a portfolio classified as balanced.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 14.05%, with a significant drawdown of -33.90%. These figures suggest that while the portfolio has been capable of strong growth, it has also experienced considerable volatility, as evidenced by the substantial drawdown. The days contributing most significantly to returns highlight the portfolio's susceptibility to market swings. When benchmarked against a diversified balanced portfolio, the volatility and drawdown may be higher due to the heavy equity concentration, but the growth rate is also notably strong, reflecting the higher risk-return trade-off inherent in equity investments.

Projection Info

Monte Carlo simulations, using historical data to project future outcomes, suggest a wide range of potential portfolio values. The 50th percentile outcome indicates a substantial potential for growth, while the 5th percentile underscores the risk of less favorable outcomes. These projections, while useful, are based on past performance, which is not a reliable indicator of future results. They provide a probabilistic forecast rather than a guaranteed outcome, highlighting the importance of understanding the portfolio's risk profile and the investor's capacity for risk.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks, with a 99% investment in equities and a minimal 1% in cash. This allocation underscores a growth-oriented strategy but also reflects a higher risk profile, given the inherent volatility of equity markets. The absence of bonds or other fixed-income securities limits the portfolio's ability to hedge against market downturns, contrasting with a more traditional balanced portfolio which would typically include a mix of stocks and bonds to mitigate risk.

Sectors Info

  • Technology
    29%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sectoral allocation within the portfolio shows a significant concentration in technology, financial services, and consumer cyclicals, which are sectors known for their growth potential but also for their volatility. The emphasis on these sectors may drive performance in bullish markets but could also lead to greater drawdowns during corrections, especially in tech-heavy downturns. This concentration contrasts with a more evenly distributed sectoral exposure, which could potentially offer more stability in fluctuating markets.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The geographic allocation reveals a strong bias towards North American equities, primarily U.S. stocks, with limited exposure to international markets. This focus on the U.S. market has historically provided strong returns but also exposes the portfolio to regional economic and political risks. The modest allocation to developed Europe and emerging Asian markets offers some diversification, but the portfolio may benefit from increased exposure to other international markets to further mitigate risk and tap into global growth opportunities.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's emphasis on mega and big-cap stocks, constituting 80% of the allocation, aligns with its focus on stability and growth potential inherent in large, established companies. However, the minimal exposure to small and micro-cap stocks limits opportunities for outsized gains from smaller companies' growth. This market cap distribution supports a lower volatility profile relative to portfolios with a higher small-cap allocation but may also cap potential returns.

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.

Considering the Efficient Frontier, the portfolio's current allocation suggests there may be room for optimization to achieve a better risk-return ratio. Adjusting the asset allocation to include a broader range of asset classes could potentially move the portfolio closer to the Efficient Frontier, optimizing for the highest possible returns for a given level of risk. This process would involve balancing the current strong growth orientation with investments that offer risk mitigation, enhancing the portfolio's overall performance and stability.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.50%

The portfolio's average dividend yield of 1.50% contributes to its total return, providing a steady income stream in addition to potential capital gains. The higher yield from the international ETF suggests a beneficial diversification effect, offering income even in periods of stagnant price growth. However, for a portfolio with a balanced profile, exploring options with higher dividend yields or incorporating fixed-income assets could enhance income generation while potentially reducing volatility.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from exceptionally low management costs, with a total expense ratio (TER) of 0.03%. These low costs are crucial for enhancing long-term returns, as they minimize the drag on performance that higher fees can cause. This cost efficiency is a significant strength of the portfolio, aligning with best practices for long-term investment strategy by ensuring that more of the portfolio's returns are retained by the investor rather than being consumed by fees.

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