A balanced portfolio with a strong S&P 500 focus and moderate international diversification

Report created on Dec 23, 2024

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 heavily weighted towards the Vanguard S&P 500 ETF, making up 70% of the total. This indicates a strong focus on U.S. large-cap equities. The remaining 30% is split between international stocks and growth-oriented U.S. equities. Compared to typical balanced portfolios, this one leans more towards equities, with minimal exposure to other asset classes like bonds. This composition suggests a strategy focused on capital appreciation, with less emphasis on income generation or stability. To enhance diversification, consider incorporating other asset classes such as fixed income, which can help balance the risk profile and provide more consistent returns.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 12.61%, indicating strong growth over time. However, it also experienced a significant maximum drawdown of -33.62%, reflecting potential volatility. Compared to typical balanced portfolios, this performance suggests a higher risk-return profile. It's crucial to understand that past performance doesn't guarantee future results, but it provides insight into how the portfolio might react to market conditions. To mitigate future drawdowns, consider diversifying further across asset classes or sectors, which could help smooth out returns during volatile periods.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median expected return of 369.43%. This method uses historical data to model future scenarios, but it's important to note that these are probabilistic estimates, not certainties. While the portfolio shows a high likelihood of positive returns, the variance in outcomes highlights the inherent uncertainty in investing. To better align with personal risk tolerance and goals, it might be beneficial to periodically review and adjust the asset allocation, ensuring it remains appropriate for the changing market conditions and personal circumstances.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, accounting for over 99% of the total allocation. This high concentration in equities suggests a focus on growth, but it also exposes the portfolio to market volatility. In comparison, typical balanced portfolios might include a mix of stocks, bonds, and cash to provide stability and income. To enhance diversification and reduce risk, consider adding fixed-income securities or other asset classes. This approach can help cushion the portfolio during market downturns while still allowing for growth opportunities.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation shows a significant emphasis on technology, comprising over 30% of the portfolio. This concentration aligns with the broader market trends but may increase sensitivity to sector-specific risks, such as regulatory changes or technological disruptions. Other sectors like financial services and consumer cyclicals also have notable weightings. To reduce potential sector-specific risks, consider rebalancing towards a more evenly distributed sector allocation. This can help ensure the portfolio is not overly reliant on the performance of a single sector and can better withstand various economic conditions.

Regions Info

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

Geographically, the portfolio is heavily tilted towards North America, with over 81% exposure. This concentration offers familiarity and stability but limits diversification benefits that come from global exposure. Comparatively, a more geographically diversified portfolio might include greater allocations to emerging markets or underrepresented regions. By increasing exposure to international markets, the portfolio can potentially capture growth opportunities and reduce region-specific risks. However, it's essential to consider the impact of currency fluctuations and geopolitical factors when expanding geographic diversification.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio's assets show high correlation, particularly between the Vanguard S&P 500 ETF and the Vanguard Growth Index Fund ETF Shares. This means these assets tend to move together, which can limit diversification benefits during market downturns. In times of market stress, highly correlated assets may not provide the desired risk mitigation. To enhance diversification, consider incorporating assets with lower correlation to the existing holdings. This could involve adding different asset classes or sectors that have historically shown less correlation with the current portfolio composition.

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. However, the current high correlation between some assets suggests limited diversification benefits. To achieve a more efficient portfolio, consider reducing exposure to overlapping assets and reallocating towards those with complementary risk profiles. This approach can help enhance the overall risk-return balance, ensuring the portfolio is better positioned to achieve its investment objectives. Remember, optimization is based on current assets and may not fully address other goals like income or sector diversification.

Dividends Info

  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Growth Index Fund ETF Shares 0.30%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 0.98%

The portfolio's dividend yield stands at 0.98%, reflecting a modest income component. This is primarily driven by the Vanguard Total International Stock Index Fund ETF Shares, which offers a higher yield compared to the other holdings. For investors seeking income, this yield may be lower than desired, especially when compared to income-focused portfolios. To increase the income potential, consider adding higher-yielding assets or dividend-focused funds. However, it's important to balance the pursuit of yield with the overall growth and risk objectives of the portfolio.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • 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 TER of 0.04%. This aligns well with best practices, as lower costs can significantly enhance long-term returns by minimizing the drag on performance. Compared to industry averages, these costs are exceptionally competitive, supporting the portfolio's growth potential. It's essential to maintain this cost efficiency by periodically reviewing the expense ratios of the holdings. If there are opportunities to further reduce costs without sacrificing quality, consider making adjustments to optimize the portfolio's net returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey