A balanced diversified portfolio with strong U.S. focus and moderate risk exposure

Report created on Mar 27, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is structured with 85% equity, 10% bonds, and 5% real estate. The equity portion is split among various ETFs, including a significant 25% allocation to the Vanguard S&P 500 ETF. Compared to common benchmarks, this composition leans heavily towards equities, suggesting a focus on growth. Such a structure is relevant for investors seeking capital appreciation, but it may expose the portfolio to market volatility. To balance risk and return, consider adjusting the bond allocation upward if market conditions suggest increased volatility.

Growth Info

Historically, this portfolio has shown a CAGR of 9.79%, which is commendable. It has experienced a maximum drawdown of -23.51%, indicating vulnerability during market downturns. The portfolio's performance closely mirrors broad market trends, meaning it has benefited from the overall market growth. While past performance is a useful guide, remember it doesn't guarantee future returns. To mitigate drawdowns, consider diversifying further into less correlated asset classes or increasing bond exposure.

Projection Info

The Monte Carlo simulation, using 1,000 scenarios, projects an annualized return of 8.80%. This analysis uses historical data to forecast potential outcomes, with a 5th percentile result showing a -5.5% return and a 67th percentile at 281.0%. While these projections provide a range of potential outcomes, they are not certainties. They highlight the importance of maintaining a well-diversified portfolio to manage risk. Consider stress-testing the portfolio against various economic scenarios to better understand potential risks.

Asset classes Info

  • Stocks
    84%
  • Bonds
    10%
  • Real Estate
    5%
  • Cash
    1%

The portfolio's allocation is heavily weighted towards stocks (84%), with bonds (10%) and real estate (5%) providing some diversification. Compared to typical benchmarks, the bond allocation is lower, suggesting a growth-oriented approach. Such a heavy equity focus can lead to higher returns but also increased risk. A more balanced approach might involve increasing bond holdings to cushion against equity market volatility, especially if nearing a financial goal or during uncertain economic times.

Sectors Info

  • Technology
    21%
  • Health Care
    18%
  • Financials
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Industrials
    6%
  • Real Estate
    6%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    1%

Sector-wise, the portfolio is technology-heavy at 21%, followed by healthcare at 18%. This mirrors current market trends where tech and healthcare have been strong performers. However, such concentration can increase volatility, especially if these sectors face downturns. The portfolio's sector composition is broadly aligned with benchmarks, indicating good diversification. To further mitigate sector-specific risks, consider ensuring exposure to defensive sectors like utilities or consumer staples, which can provide stability during market fluctuations.

Regions Info

  • North America
    70%
  • Asia Emerging
    8%
  • Europe Developed
    4%
  • Asia Developed
    3%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily skewed towards North America (70%), with limited exposure to emerging markets and other regions. This aligns with many U.S.-based benchmarks but may limit global diversification benefits. While the U.S. market has performed well historically, increased global exposure could reduce risk and capture growth in international markets. Consider gradually increasing allocations to underrepresented regions to enhance diversification and capitalize on global economic growth.

Market capitalization Info

  • Large-cap
    36%
  • Mega-cap
    31%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio is diversified across market capitalizations, with 36% in big-cap, 31% in mega-cap, and smaller portions in medium, small, and micro-caps. This distribution provides a balance between stability and growth potential. Large-cap stocks offer stability, while small and mid-caps can drive growth. However, the low allocation to small and micro-caps may limit potential high-growth opportunities. Consider modestly increasing exposure to smaller caps to capture potential growth while maintaining overall portfolio stability.

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 benefit from optimization along the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting current asset allocations to achieve maximum return for a given level of risk. The current asset mix is growth-oriented but may not be fully optimized for risk-adjusted returns. Consider using portfolio optimization tools to evaluate potential allocation adjustments, ensuring they align with your risk tolerance and investment goals.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard Real Estate Index Fund ETF Shares 4.00%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.02%

With a total yield of 2.02%, this portfolio provides a moderate level of income through dividends. The Schwab U.S. Dividend Equity ETF and Vanguard Real Estate Index Fund contribute significantly to this yield. Dividends can be an important income source, particularly for those seeking regular cash flow. If income generation is a priority, consider increasing allocations to high-dividend stocks or funds. However, ensure this aligns with overall investment goals and risk tolerance.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.07%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.07%, which is beneficial for long-term returns. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This is a well-aligned aspect of the portfolio. Regularly review and compare TERs across similar funds to ensure you are maintaining cost efficiency. If opportunities arise to switch to lower-cost options without sacrificing performance, consider doing so to enhance net returns.

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