A broadly diversified portfolio with a balanced risk-reward profile and low costs

Report created on Apr 1, 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 consists of two primary ETFs: Vanguard Total International Stock Index Fund ETF Shares (70%) and Vanguard Total Stock Market Index Fund ETF Shares (30%). This allocation provides broad exposure to both international and domestic markets, aligning with a balanced investment strategy. Compared to typical benchmarks, the portfolio's composition is well-diversified, covering a wide range of sectors and regions. Maintaining this balance can help mitigate risks associated with market volatility. To further enhance diversification, consider exploring additional asset classes such as bonds or real assets, which could provide stability during market downturns.

Growth Info

With a historical CAGR of 8.23%, the portfolio has demonstrated solid growth over time. This performance is comparable to many broad market indices, indicating a well-structured investment strategy. However, it's important to note the maximum drawdown of -34.46%, which highlights potential volatility during market downturns. Historical performance provides a useful benchmark, but it doesn't guarantee future success. To manage risk, consider employing strategies like rebalancing or incorporating defensive assets. These can help maintain portfolio stability and protect against significant losses during adverse market conditions.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests an annualized return of 10.28% across 1,000 simulations. While 959 simulations showed positive returns, it's important to remember that these projections are not guarantees. The simulation's 5th percentile outcome of 7.8% highlights potential risks, while the 67th percentile outcome of 346.5% indicates possible upside. To better prepare for future uncertainties, consider regularly reviewing and adjusting your portfolio based on evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    98%
  • Cash
    2%

The portfolio is heavily weighted in stocks (98%), with a small cash allocation (2%). This stock-heavy allocation offers strong growth potential but also increases exposure to market volatility. Compared to typical benchmarks, the lack of fixed-income assets may limit downside protection during market downturns. Diversifying into other asset classes, such as bonds or real estate, could help balance risk and return. By incorporating a broader range of asset classes, you can enhance diversification and reduce the impact of market fluctuations on your portfolio.

Sectors Info

  • Financials
    20%
  • Technology
    19%
  • Industrials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    5%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation is well-distributed, with significant exposure to financial services (20%) and technology (19%). This balance aligns with common benchmarks, providing a diversified sectoral mix. However, the concentration in technology may lead to higher volatility during periods of interest rate hikes or regulatory changes. To mitigate sector-specific risks, consider periodically reviewing your sector allocations and adjusting them as needed. This can help ensure that your portfolio remains well-balanced and aligned with your investment objectives.

Regions Info

  • North America
    35%
  • Europe Developed
    28%
  • Asia Emerging
    11%
  • Japan
    11%
  • Asia Developed
    7%
  • Australasia
    3%
  • Africa/Middle East
    3%
  • Latin America
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is diversified across multiple regions, with notable exposure to North America (35%) and Europe Developed (28%). This geographic spread provides a balanced mix of developed and emerging markets, reducing regional risks. However, the relatively low exposure to emerging markets (1% in Europe Emerging and 1% in Latin America) may limit potential growth opportunities. To enhance geographic diversification, consider increasing allocations to underrepresented regions, which could offer higher growth potential and further reduce regional risks.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    31%
  • Mid-cap
    18%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is skewed towards mega-cap (43%) and big-cap (31%) stocks. This allocation provides stability and growth potential, as larger companies tend to be more resilient during market downturns. However, the limited exposure to small-cap (5%) and micro-cap (1%) stocks may restrict potential upside. Small-cap stocks often offer higher growth prospects but come with increased volatility. To capture potential gains, consider gradually increasing exposure to smaller-cap stocks while maintaining a balanced risk profile.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting asset allocations, the portfolio's expected return could increase to 12.71% without raising the current risk level. However, the optimal portfolio has a risk level of 18.05%, which may not align with your risk tolerance. Before making changes, consider whether the potential increase in returns justifies the associated risk. This analysis can help you determine the most suitable asset allocation for your financial objectives and risk appetite.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.35%

The portfolio's dividend yield stands at 2.35%, with contributions from both ETFs. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. For income-focused investors, maintaining a healthy dividend yield is crucial. To optimize dividend income, consider periodically reviewing your holdings and reallocating to higher-yielding assets if necessary. This can help ensure that your portfolio continues to generate a reliable income stream while supporting long-term growth objectives.

Ongoing product costs Info

  • 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) 0.04%

With a total expense ratio (TER) of 0.04%, the portfolio benefits from low costs, which support better long-term performance. Compared to industry averages, these costs are impressively low, allowing more of your returns to be reinvested. Keeping costs in check is crucial for maximizing net returns over time. To maintain this advantage, consider regularly reviewing your portfolio for cost efficiency and exploring low-cost investment options. This approach can help ensure that your investment strategy remains cost-effective and aligned with your financial goals.

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