A balanced portfolio with a strong international focus and low costs
Report created on Aug 3, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 85.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 15.00%
The portfolio is predominantly invested in international equities through the Vanguard Total International Stock Index Fund ETF Shares, comprising 85% of the portfolio, with the remaining 15% allocated to U.S. equities via the Vanguard Total Stock Market Index Fund ETF Shares. This composition reflects a strategic emphasis on global diversification, leveraging the growth potential of international markets while maintaining a foothold in the U.S. stock market. The allocation across only two asset classes, stocks and a minimal cash position, underscores a focused yet balanced approach to equity investment, aligning with the portfolio's risk classification of balanced.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 8.59%, with a maximum drawdown of -34.73%. These figures indicate a resilient performance through market cycles, with the days contributing to 90% of returns numbering just 18, suggesting that the portfolio's gains are concentrated in specific periods of strong market performance. This historical performance, while indicative of past success, should be viewed with the understanding that past results do not guarantee future returns.
Projection
Monte Carlo simulations, which project future performance based on historical data, suggest a wide range of outcomes for this portfolio, with a median increase of 276.9% and a 67th percentile performance possibly reaching a 407.3% increase. However, it's important to note that while Monte Carlo analysis provides a spectrum of potential futures, it is inherently limited by its reliance on past data, which may not predict future market conditions accurately.
Asset classes
- Stocks 97%
- Cash 2%
With 97% of the portfolio in stocks and the remainder in cash, the asset class allocation underlines a growth-oriented strategy with a higher risk tolerance than more conservative, bond-heavy portfolios. This stock-focused strategy is suitable for investors aiming for long-term capital appreciation, though it may experience higher volatility compared to portfolios with significant allocations to fixed income or other less volatile asset classes.
Sectors
- Financials 22%
- Technology 16%
- Industrials 15%
- Consumer Discretionary 10%
- Health Care 9%
- Consumer Staples 6%
- Telecommunications 6%
- Basic Materials 6%
- Energy 4%
- Utilities 3%
- Real Estate 3%
The sectoral distribution within the portfolio is well-diversified, covering financial services, technology, industrials, and consumer cyclicals as the leading sectors. This diversification helps mitigate sector-specific risks and capitalizes on growth across a broad spectrum of the global economy. However, the emphasis on financial services and technology sectors may introduce volatility, given their susceptibility to economic cycles and interest rate changes.
Regions
- Europe Developed 33%
- North America 22%
- Asia Emerging 13%
- Japan 13%
- Asia Developed 9%
- Australasia 4%
- Africa/Middle East 3%
- Latin America 2%
- Europe Emerging 1%
The portfolio's geographic allocation is heavily weighted towards developed Europe and North America, with significant exposure to emerging markets in Asia. This global spread enhances diversification and the potential for capturing growth in both established and developing economies. However, the substantial allocation to international markets may introduce additional risks, including currency fluctuations and geopolitical uncertainties.
Market capitalization
- Mega-cap 44%
- Large-cap 31%
- Mid-cap 17%
- Small-cap 4%
- Micro-cap 1%
The market capitalization breakdown, with a focus on mega and big-cap stocks, suggests a preference for established, large-scale companies likely to offer stability and consistent dividends. However, the lower allocation to small and micro-cap stocks limits exposure to high-growth potential sectors, which, while riskier, can offer significant upside in bullish market conditions.
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 current portfolio's expected return of 8.59% can be optimized to a potential 13.92% at the same risk level, indicating room for improvement in asset allocation. Optimization, based on the Efficient Frontier concept, suggests that adjusting the current mix could achieve a better risk-return trade-off. However, it's essential to consider that such theoretical optimizations assume historical performance patterns will continue, which may not always be the case.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.90%
- Weighted yield (per year) 2.64%
The dividend yield of the portfolio, averaging 2.64%, contributes to its total return, offering a steady income stream in addition to potential capital gains. This yield, particularly bolstered by the higher dividend rate of the international fund, is a crucial component for investors seeking income alongside growth, especially in a low-interest-rate environment.
Ongoing product costs
- 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) 0.05%
The portfolio's total expense ratio (TER) of 0.05% is impressively low, maximizing the potential for net returns by minimizing investment costs. This cost efficiency is particularly beneficial over the long term, where even small differences in fees can significantly impact compounded returns.
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