A balanced portfolio with strong US focus and low-cost ETFs

Report created on Mar 9, 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 is composed of two ETFs: Vanguard S&P 500 ETF (80%) and Vanguard Total International Stock Index Fund ETF (20%). This structure emphasizes a heavy reliance on US equities, aligning with a balanced investment approach. While the US focus provides stability and growth potential, the limited international exposure may restrict diversification benefits. To enhance global diversification, consider increasing the allocation to international markets. However, the current composition aligns well with a moderate risk profile, providing a solid foundation for long-term growth.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 12.34%, indicating strong performance. This is comparable to the S&P 500's historical performance, reflecting the significant weight of the Vanguard S&P 500 ETF. While past performance is not indicative of future results, this track record suggests potential for continued growth. The portfolio's maximum drawdown of -33.90% highlights vulnerability during market downturns. To mitigate this risk, consider diversifying further across asset classes. Overall, the portfolio's historical performance is commendable and aligns with its risk classification.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes. The 5th percentile projects an 8.0% increase, while the 50th and 67th percentiles show significant growth at 262.9% and 373.4%, respectively. With 958 out of 1,000 simulations yielding positive returns, the portfolio demonstrates resilience. Monte Carlo analysis, while useful, is based on historical data and assumptions, which may not account for future market conditions. To better prepare for potential volatility, consider periodic reviews and adjustments. The portfolio's projected performance aligns with its balanced risk profile, offering potential for substantial growth.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99% in equities and 1% in cash. This allocation provides exposure to market growth but may increase vulnerability to market downturns. A more diversified asset class allocation could help manage risk and enhance returns. Consider introducing fixed income or alternative investments to balance the equity exposure. While the current allocation aligns with a growth-oriented strategy, diversification across asset classes can provide stability and reduce volatility, especially during uncertain market conditions.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology (30%), followed by financial services (15%) and consumer cyclicals (11%). This tech-heavy focus may lead to higher volatility, especially during periods of interest rate fluctuations. While the sector composition aligns with common benchmarks, consider diversifying into underrepresented sectors like real estate and utilities to enhance stability. The current sector allocation supports growth in a tech-driven market but could benefit from a more balanced approach to mitigate sector-specific risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly North American (81%), with limited exposure to Europe (8%), Asia (5%), and other regions. This US-centric focus may limit diversification benefits and increase vulnerability to domestic market fluctuations. To enhance global diversification, consider increasing exposure to emerging markets and other international regions. While the current geographic allocation aligns with a US-focused strategy, a more global perspective could reduce risk and capture growth opportunities in diverse markets.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap stocks (46%), with significant exposure to big (34%) and medium (18%) caps. This allocation provides stability and potential for growth but may limit exposure to smaller, high-growth companies. Consider increasing allocation to small and micro-cap stocks to capture growth opportunities and enhance diversification. While the current market cap allocation aligns with a conservative strategy, a more balanced approach could improve risk-adjusted returns and provide exposure to emerging companies.

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's risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. By adjusting the allocation between existing assets, you can achieve a more efficient portfolio. However, this optimization is based solely on current assets and may not account for other goals like diversification. While the current allocation aligns with a balanced strategy, exploring optimization techniques can enhance returns without significantly increasing risk.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with the Vanguard Total International Stock Index Fund ETF contributing a higher yield (3.10%) compared to the S&P 500 ETF (1.30%). Dividends provide a steady income stream, enhancing total returns. To increase income potential, consider adding higher-yielding assets or funds. While the current yield aligns with a growth-focused strategy, a more income-oriented approach could provide stability and supplement returns, especially during periods of market volatility.

Ongoing product costs Info

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

The portfolio's total expense ratio (TER) is impressively low at 0.04%, reflecting the cost-effectiveness of Vanguard ETFs. Low costs contribute to better long-term performance by minimizing fees and maximizing returns. Maintaining a focus on cost-efficient investments aligns with best practices for portfolio management. While the current cost structure is optimal, regularly reviewing expense ratios can ensure continued cost-effectiveness and support long-term financial goals.

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