A balanced portfolio with strong US equity focus and minimal international exposure

Report created on Jan 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards US equities, with 80% in the Vanguard S&P 500 ETF. This allocation supports strong exposure to large-cap US stocks. The remaining 20% is split between international stocks, providing some global diversification. This composition aligns with a balanced profile, offering potential growth with moderate risk. For more diversification, consider adding different asset classes like bonds or real estate, which can provide stability during market downturns. Balancing between growth and stability is key for long-term success.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 12.77%, reflecting strong past performance. However, it also experienced a significant max drawdown of -34.07%, indicating vulnerability during market downturns. This highlights the importance of considering both growth potential and risk. Comparing this to common benchmarks, the performance is impressive, but it's crucial to remember that past performance doesn't guarantee future results. Maintaining a diversified approach can help manage potential volatility and sustain long-term growth.

Projection Info

Using Monte Carlo simulations, future projections estimate an annualized return of 11.14%. This method analyzes potential outcomes by simulating numerous market scenarios based on historical data. While the results are promising, with 97.7% of simulations showing positive returns, it's important to note that these projections are not guarantees. They provide a range of possible future outcomes, helping investors understand potential risks and rewards. Regularly reviewing and adjusting the portfolio can optimize its performance as market conditions evolve.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in equities, with a negligible allocation to cash and other asset classes. This concentration in stocks can lead to higher growth potential but also increases exposure to market volatility. Diversification across multiple asset classes, such as bonds or commodities, can help mitigate risk and enhance stability. Comparing to typical benchmarks, the high equity allocation suggests a growth-oriented approach. Adjusting the asset mix can align the portfolio more closely with a balanced risk-return profile.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    3%
  • Basic Materials
    3%
  • Real Estate
    3%

Sector allocation is diverse, with significant exposure to technology (28.84%) and financial services (14.69%). This aligns with common benchmarks, indicating a well-diversified sectoral approach. However, the concentration in technology may lead to increased volatility, especially during periods of interest rate hikes. Balancing sector exposure can help manage risk and capture opportunities in varying market conditions. Regularly reassessing sector weights and market trends can ensure the portfolio remains aligned with investment goals.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio is heavily skewed towards North America, making up 85.67% of geographic exposure. While this provides stability through established markets, it limits diversification benefits from emerging markets. A more globally diversified approach can reduce region-specific risks and capture growth opportunities in underrepresented areas. Comparing to global benchmarks, the portfolio could benefit from increased international exposure. Adjusting geographic allocation can enhance diversification and potentially improve risk-adjusted 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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting allocations among current assets to achieve the desired balance. While the portfolio is already well-structured, fine-tuning asset weights can further enhance efficiency. It's important to note that optimization focuses on the existing asset mix, not necessarily adding new investments. Regularly reviewing and rebalancing can ensure the portfolio remains aligned with optimal risk and return objectives.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard S&P 500 Value Index Fund ETF Shares 2.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.66%

The portfolio's overall dividend yield is 1.66%, with contributions from the Vanguard S&P 500 ETF and international stocks. This yield provides a steady income stream, which can be reinvested for compounded growth or used for cash flow. Dividend-paying stocks can enhance total returns, especially during volatile markets. Comparing to typical benchmarks, the yield is moderate, aligning with a growth-oriented strategy. Balancing between growth and income can optimize the portfolio for both capital appreciation and cash flow needs.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard S&P 500 Value Index Fund ETF Shares 0.10%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.04%. This low TER supports better long-term performance, as minimizing fees can significantly enhance returns over time. Vanguard's cost-effective ETFs contribute to this efficiency, aligning with best practices for cost management. Regularly reviewing and comparing fund fees can ensure the portfolio remains cost-effective. Maintaining a focus on low-cost investments can optimize returns and support long-term financial goals.

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