A balanced portfolio with strong U.S. focus and moderate diversification potential

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with a significant focus on U.S. equities. The Vanguard S&P 500 ETF holds the largest share at 29.43%, followed by the Vanguard Small-Cap Growth Index Fund ETF Shares at 18.31%. This composition aligns with a balanced strategy, offering exposure to large-cap and small-cap equities, international stocks, and bonds. Compared to a typical balanced benchmark, this portfolio leans more heavily on equities, which could increase potential returns but also risk. To enhance diversification, consider increasing exposure to non-U.S. markets or alternative asset classes.

Growth Info

Historically, the portfolio has delivered a solid CAGR of 11.01%, showcasing its potential for growth. However, it has also experienced a maximum drawdown of -28.21%, indicating vulnerability during market downturns. Compared to a benchmark, this performance suggests a strong upside but with notable risk. The portfolio's ability to recover quickly from downturns is crucial, and maintaining a balance between growth and stability can help mitigate future drawdowns. Consider adding more defensive assets or increasing cash reserves to cushion against potential future volatility.

Projection Info

The forward projection using Monte Carlo simulations, which run 1,000 scenarios based on historical data, indicates an average annualized return of 9.72%. With 976 simulations showing positive returns, the outlook is generally optimistic. However, it's essential to remember that these projections are based on past performance and do not guarantee future results. To improve potential outcomes, consider adjusting allocations to enhance diversification and reduce reliance on past trends. Regularly reassessing the portfolio's alignment with personal goals and market conditions can help optimize future performance.

Asset classes Info

  • Stocks
    84%
  • Bonds
    15%
  • Cash
    1%

The portfolio's asset allocation is heavily weighted towards stocks at 84%, with bonds making up 15% and cash at 1%. This stock-heavy allocation suggests a focus on growth, which can offer higher returns but also increased volatility. Compared to a standard balanced portfolio, which might have a more even split between stocks and bonds, this allocation leans towards higher risk. To achieve a more balanced risk profile, consider increasing bond exposure or diversifying into other asset classes such as real estate or commodities.

Sectors Info

  • Technology
    24%
  • Financials
    10%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a strong concentration in technology at 24%, followed by financial services, consumer cyclicals, and industrials, each around 10%. This tech-heavy orientation could lead to higher volatility, particularly during periods of interest rate hikes or tech sector downturns. Compared to common benchmarks, the sector distribution is relatively aligned, but consider diversifying further into underrepresented sectors like utilities or healthcare to reduce sector-specific risks. Balancing sector exposure can help stabilize returns across various economic cycles.

Regions Info

  • North America
    66%
  • Europe Developed
    11%
  • Japan
    4%
  • Australasia
    1%
  • Asia Developed
    1%
  • Asia Emerging
    1%

Geographic allocation is predominantly focused on North America, accounting for 66% of the portfolio. This heavy U.S. exposure aligns with many investors' home-country bias but may limit global diversification benefits. Compared to global benchmarks, there's underexposure to emerging markets and regions like Latin America and Africa. Expanding geographic diversity can help mitigate risks associated with regional economic downturns and currency fluctuations. Consider increasing allocations to international markets to capture growth opportunities outside the U.S. and enhance overall portfolio resilience.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    23%
  • Mid-cap
    16%
  • Small-cap
    12%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is skewed towards mega-cap stocks at 32%, followed by big and medium caps. This mix provides stability and growth potential, as larger companies tend to be more resilient in economic downturns. However, the relatively lower allocation to small and micro-cap stocks may limit exposure to high-growth opportunities. Compared to benchmarks, this distribution is fairly typical for a balanced portfolio. To capture more growth potential, consider slightly increasing allocations to small and mid-cap stocks while maintaining a risk-balanced approach.

Redundant positions Info

  • Vanguard Total International Stock Index Fund ETF Shares
    BNY Mellon International Equity ETF
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard Total International Stock Index Fund ETF Shares and the BNY Mellon International Equity ETF, as well as the Vanguard Total Stock Market Index Fund ETF Shares and the Vanguard S&P 500 ETF. High correlation can reduce diversification benefits, especially during market downturns when correlated assets may move together. To enhance diversification, consider replacing or reducing exposure to overlapping assets. Introducing assets with lower correlations can improve risk management and potentially enhance overall portfolio performance.

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 benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, the presence of highly correlated assets may hinder achieving optimal diversification. Before optimizing, focus on reducing overlap and enhancing diversification. Adjusting the allocation of existing assets can help align the portfolio with the Efficient Frontier, potentially improving returns for a given level of risk. Regularly reassessing the portfolio's alignment with the Efficient Frontier can ensure it remains optimized as market conditions and personal goals evolve.

Dividends Info

  • BNY Mellon International Equity ETF 1.80%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • Invesco QQQ Trust 0.50%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.30%
  • Vanguard S&P 500 ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 5.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.50%
  • Weighted yield (per year) 1.77%

The portfolio's total dividend yield stands at 1.77%, with notable contributions from the Vanguard Emerging Markets Government Bond Index Fund ETF Shares at 5.40% and the Vanguard Total Bond Market Index Fund ETF Shares at 3.40%. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. Compared to income-focused portfolios, this yield is moderate, reflecting a growth-oriented strategy. To increase income potential, consider adding higher-yielding assets or dividend-focused funds, while ensuring alignment with overall investment goals and risk tolerance.

Ongoing product costs Info

  • BNY Mellon International Equity ETF 0.04%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco QQQ Trust 0.20%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 0.20%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio is impressively low at 0.07%, reflecting cost-effective management. Low costs are crucial for enhancing long-term returns, as they minimize the drag on performance. Compared to industry averages, this portfolio is well-positioned in terms of cost efficiency. Maintaining this low-cost structure is beneficial, but it's important to ensure that cost-saving measures do not compromise diversification or risk management. Continue to monitor fees and explore opportunities to further reduce costs without sacrificing quality or performance.

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