A highly diversified balanced portfolio with low costs and moderate risk exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced approach, moderate risk tolerance, and a medium to long-term investment horizon. It aims for growth with some stability through bond exposure, making it ideal for those seeking capital appreciation without excessive volatility. The focus on low costs and global diversification aligns with investors looking for efficient, broad market exposure. This type of investor values steady growth and is comfortable with market fluctuations, aiming to build wealth over time.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    60.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%
  • Vanguard Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    10.00%
  • Vanguard High Dividend Yield Index Fund ETF Shares
    VYM - US9219464065
    10.00%

This portfolio comprises primarily of equity ETFs, with a significant 60% allocation to the Vanguard Total Stock Market Index Fund ETF. Additionally, it includes international equities at 20%, bonds at 10%, and high dividend yield equities at 10%. Compared to a typical balanced portfolio, which might have a 60/40 split between stocks and bonds, this portfolio leans more heavily on equities. This structure suggests a focus on growth while maintaining some stability through bonds. It aligns well with a balanced risk profile, offering diversification across asset classes.

Growth Info

The portfolio has shown robust historic performance, with a Compound Annual Growth Rate (CAGR) of 10.63%. This is impressive and suggests that the portfolio has outperformed many standard benchmarks over time. However, it also experienced a significant maximum drawdown of -32.23%, indicating vulnerability during market downturns. Understanding that past performance doesn't guarantee future results, it's essential to consider both the potential for high returns and the associated risks. Maintaining a diversified mix can help mitigate such drawdowns in the future.

Projection Info

Forward projections using Monte Carlo simulations, which assess potential future performance based on historical data, indicate an annualized return of 8.42%. With a high number of simulations showing positive returns, this suggests a favorable outlook. However, it's important to remember that these simulations are based on past data and assumptions, which may not account for future market changes. Regularly reviewing the portfolio and adjusting as necessary can help align with changing market conditions and personal goals.

Asset classes

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's allocation is heavily weighted towards stocks, at 89.46%, with bonds making up 9.85% and a negligible amount in cash and other assets. This heavy equity weighting suggests a strategy focused on capital appreciation. While this can lead to higher returns, it also increases exposure to market volatility. A more balanced allocation between stocks and bonds might reduce risk but could also lower potential returns. Assessing whether this allocation aligns with personal risk tolerance and investment goals is crucial.

Sectors

  • Technology
    22%
  • Financials
    15%
  • Health Care
    10%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector-wise, the portfolio is diversified across 11 sectors, with notable concentrations in Technology (22.28%), Financial Services (14.59%), and Healthcare (9.87%). This distribution mirrors common benchmark indices, providing a solid foundation for sector diversification. However, the technology-heavy allocation may lead to higher volatility, especially in times of interest rate changes. Monitoring sector performance and making adjustments when necessary can ensure the portfolio remains aligned with broader market trends and personal objectives.

Regions

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

With 71.16% exposure to North America, the portfolio is heavily weighted towards this region. While this aligns with the client's USA base, it limits global diversification. The remaining exposure is spread thinly across Europe, Asia, and other regions. This geographic concentration could lead to increased risk if the North American market underperforms. Considering a slight increase in international exposure might enhance diversification and reduce region-specific risks, aligning the portfolio more closely with global benchmarks.

Dividends

  • Vanguard Total Bond Market Index Fund ETF Shares 3.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.98%

The portfolio's average dividend yield is 1.98%, with contributions from various funds, including the high dividend yield ETF at 2.7%. Dividends can provide a steady income stream, which is beneficial for reinvestment or income needs. However, the focus remains on growth rather than income. For those seeking more income, increasing the allocation to high-yielding assets might be considered. Balancing growth and income is key to meeting long-term financial goals.

Ongoing product costs

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.04%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of just 0.04%. This is significantly lower than the average for similar portfolios, supporting better long-term performance by minimizing cost drag. Keeping costs low is a crucial factor in enhancing net returns. Regularly reviewing and comparing the expense ratios of current holdings with alternatives can ensure continued cost efficiency and maximize the portfolio's potential.

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.

Based on the current asset allocation, the portfolio appears well-positioned on the Efficient Frontier, suggesting an optimal balance of risk and return. The Efficient Frontier is a concept that illustrates the best possible return for a given level of risk. This doesn't necessarily mean the portfolio is fully diversified, but it does indicate a strong risk-return ratio. Regularly revisiting this balance and making adjustments as needed can help maintain efficiency as market conditions and personal circumstances evolve.

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