Globally diversified two fund portfolio with strong simplicity and risk efficient allocation
Report created on Apr 23, 2024Risk profile
4/7
Diversification profile
4/5
Positions
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VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 90.00% -
BN Vanguard Total World Bond ETF
BNDW - US92206C5655 10.00%
This portfolio is extremely simple: about 90% in a global stock ETF and 10% in a global bond ETF. That means one fund is doing nearly all the growth and risk heavy lifting, while the smaller bond slice acts as ballast. Structurally, this mirrors a classic “balanced but growth tilted” mix, just implemented in the most streamlined way possible. Simplicity really matters because fewer moving parts reduce the chance of mistakes, drift, or forgotten holdings. The main takeaway is that this structure is easy to manage and already broadly diversified inside each fund, so fine‑tuning tends to be about adjusting the stock–bond split rather than swapping lots of individual holdings.
Growth
Historically, $1,000 grew to about $2,012 over the period, which is a compound annual growth rate (CAGR) of 9.72%. CAGR is like your average speed on a road trip, smoothing out bumps along the way. The portfolio lagged the US market but was only a bit behind the global market, while experiencing a max drawdown of about -31%, slightly milder than both benchmarks. Max drawdown is the worst peak‑to‑trough fall; it tells you how painful the worst stretch felt. This pattern fits a global, slightly lower‑risk allocation. It’s worth remembering that past performance can’t predict the future, but this track record suggests solid growth with reasonable downside given the equity-heavy mix.
Asset classes
- Stocks 90%
- Bonds 10%
Asset class exposure is straightforward: 90% stocks and 10% bonds. That’s more aggressive than a classic 60/40 mix and more aligned with a growth‑focused balanced investor with a long horizon. Stocks drive returns but also most of the portfolio’s ups and downs; the small bond slice mainly provides income and a modest cushion during equity sell‑offs. This allocation is well-balanced for someone willing to tolerate meaningful volatility in exchange for higher expected returns. Over time, adjusting that stock–bond ratio is the main lever to dial risk up or down. For someone nearing large withdrawals, increasing the bond share could help smooth the ride; for long horizons, the current tilt is very growth friendly.
Sectors
- Technology 23%
- Financials 15%
- Industrials 11%
- Consumer Discretionary 9%
- Health Care 8%
- Telecommunications 7%
- Consumer Staples 5%
- Basic Materials 4%
- Energy 4%
- Utilities 2%
- Real Estate 2%
This breakdown covers the equity portion of your portfolio only.
Sector allocation is nicely spread out, with technology the largest at about 23%, followed by financials, industrials, and consumer-related areas, plus meaningful exposure to health care, telecom, and more cyclical segments like energy and materials. This mix looks broadly in line with global benchmarks, which is a strong indicator of diversification and means no single industry is dominating excessively. A higher tech weight is natural in global indexes, but here it’s not overwhelming. Sector balance matters because different industries lead and lag at different points in the economic cycle. This alignment with broad market weights helps avoid the risk of over‑committing to a fad sector or being too exposed to any one economic theme.
Regions
- North America 57%
- Europe Developed 13%
- Japan 6%
- Asia Developed 5%
- Asia Emerging 5%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
This breakdown covers the equity portion of your portfolio only.
Geographically, the portfolio has about 57% in North America, with the rest spread across developed Europe, Japan, developed and emerging Asia, Australasia, and small slices in Latin America and Africa/Middle East. That North American tilt is close to the actual global market capitalization split, which is beneficial because it reflects where most of the world’s listed value sits today. At the same time, the meaningful exposure outside North America supports diversification across currencies, political systems, and economic cycles. This allocation is well-balanced and aligns closely with global standards, reducing the risk that outcomes hinge on a single region’s fortunes. It’s a classic “own the world” profile rather than a home‑country heavy approach.
Market capitalization
- Mega-cap 39%
- Large-cap 28%
- Mid-cap 16%
- Small-cap 5%
- Micro-cap 1%
This breakdown covers the equity portion of your portfolio only.
Market cap exposure leans clearly toward larger companies: around 39% mega‑cap, 28% large‑cap, with smaller but still meaningful allocations to mid, small, and micro caps. That’s exactly what you’d expect from a global market‑cap weighted index approach. Bigger companies tend to be more stable and liquid, which can reduce volatility, while mid and small caps inject additional growth potential and diversification. This balance means the portfolio benefits from the leadership of well‑established global giants without completely missing the return potential of smaller, more dynamic firms. For most investors, this kind of size mix is a solid, low‑maintenance default that avoids the extremes of being either too concentrated in mega‑caps or overly tilted toward thinly traded small names.
True holdings
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BN Vanguard Bond Index Funds - Vanguard Total Bond Market ETF 5.08%
Part of fund(s):- Vanguard Total World Bond ETF
-
BN Vanguard Charlotte Funds - Vanguard Total International Bond ETF 4.92%
Part of fund(s):- Vanguard Total World Bond ETF
-
NV NVIDIA Corporation 3.38%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
AA Apple Inc 3.13%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
MS Microsoft Corporation 2.37%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
AM Amazon.com Inc 1.64%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
GO Alphabet Inc Class A 1.48%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
23 Taiwan Semiconductor Manufacturing Co. Ltd. 1.23%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
AV Broadcom Inc 1.20%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
GO Alphabet Inc Class C 1.20%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
- Top 10 total 25.61%
This breakdown covers the equity portion of your portfolio only.
Looking through the ETFs, the top exposures include familiar mega names like NVIDIA, Apple, Microsoft, Amazon, Alphabet, and Taiwan Semiconductor, alongside large US and international bond funds. Because both stock and bond ETFs are broad market trackers, these big companies appear as natural top weights, not as separate “bets.” There is some hidden concentration in the largest global tech giants, since they dominate global indexes, but that’s typical of market‑cap weighted investing. Overlap analysis is based only on ETF top‑10 holdings, so it understates diversification: thousands of smaller positions sit underneath. The main takeaway is that concentration risk is more about overall market structure than about you doubling up on specific single stocks.
Factors
Factor exposures are broadly neutral across value, size, momentum, quality, and yield, with a more notable tilt only in low volatility. Factors are characteristics, like “cheap vs expensive” (value) or “steady vs jumpy” (low volatility), that research links to long‑term return and risk patterns. Here, low volatility at 64% suggests a mild lean toward steadier companies relative to the overall market. That can mean smaller drawdowns and a smoother ride, though it may lag in frantic risk‑on rallies. The largely neutral stance elsewhere indicates a well-balanced factor profile without big bets on any single investing style. This is reassuring for someone who wants broad exposure without needing to track or time specific factor trends.
Risk contribution
-
Vanguard Total World Stock Index Fund ETF Shares
Weight: 90.00% 99.4% -
Vanguard Total World Bond ETF
Weight: 10.00% 0.6%
Risk contribution shows how much each holding adds to the portfolio’s overall ups and downs, which can differ a lot from simple weights. The global stock ETF is 90% of the weight but contributes about 99% of the risk, while the global bond ETF’s 10% weight adds less than 1% of total volatility. That gap makes sense: bonds are much steadier than stocks. The key insight is that nearly all the risk lives in the stock fund, so tweaking its weight has a big impact on overall behavior. If a smoother ride is ever desired, nudging more into bonds is far more effective than adding extra equity funds on top of the existing structure.
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.
On the risk–return chart, the portfolio sits on or very near the efficient frontier, with a Sharpe ratio of 0.51. The Sharpe ratio measures return per unit of risk; higher is better. The optimal mix of these same holdings could reach a Sharpe of 0.57 at slightly higher risk and return, while the minimum variance portfolio is much calmer but far lower returning. Being close to the frontier means the current allocation is already using its two funds very efficiently. Any improvements from reweighting would likely be modest tweaks rather than game‑changers. That’s a strong validation that the simple 90/10 split is doing its job well from a risk‑adjusted performance perspective.
Dividends
- Vanguard Total World Bond ETF 4.20%
- Vanguard Total World Stock Index Fund ETF Shares 1.80%
- Weighted yield (per year) 2.04%
The total yield of about 2.04% comes from roughly 1.8% on stocks and 4.2% on bonds. Yield is the cash income the portfolio throws off each year, before any price changes. For a growth‑oriented, equity‑heavy mix, this income level is quite reasonable and can either be reinvested to speed up compounding or used to fund part of spending needs. Dividends and bond interest also help smooth overall returns, as they keep coming even when markets are choppy. While yield alone shouldn’t drive decisions — high yields can signal risk — this moderate, diversified income stream nicely complements the portfolio’s long‑term growth focus without forcing exposure to narrowly high‑yielding or potentially unstable segments.
Ongoing product costs
- Vanguard Total World Bond ETF 0.05%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.07%
Costs are impressively low, with the overall total expense ratio (TER) sitting around 0.07%. TER is the annual fee charged by the funds as a percentage of your investment; think of it as the “drag” that quietly chips away at returns. Over decades, even small fee differences compound into big dollar amounts. Being down at this level is a significant strength of the portfolio and fully in line with best practices for index‑based investing. It means more of the underlying market return actually stays in your pocket. There’s not much to optimize here; it’s already near the floor of what’s realistically available for broad, global exposure.
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