A balanced portfolio with strong diversification and moderate risk exposure

Report created on Jan 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of eight ETFs, with a significant allocation to the Vanguard S&P 500 ETF at 30%. Real estate and international stocks also have notable allocations, each at 15%. Bonds make up 10%, and smaller allocations are given to small-cap, global real estate, quantum, and semiconductor ETFs. Compared to typical balanced portfolios, this one leans towards equities, providing growth potential but also increased volatility. The inclusion of real estate and bonds helps balance risk. To further align with benchmark compositions, consider adjusting allocations to achieve more stability and income.

Growth Info

The portfolio has delivered a strong historical performance with a Compound Annual Growth Rate (CAGR) of 10.33%. However, it also experienced a maximum drawdown of 33%, indicating significant volatility during market downturns. This performance, while impressive, highlights the risk of relying solely on past data. Historical performance doesn't guarantee future results, but it can provide context for potential returns. To potentially mitigate drawdowns, consider diversifying further into less volatile assets or increasing bond exposure.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The median scenario projects a 257.47% increase, while the worst-case scenario shows a 15.99% loss. Although these projections offer insight, they rely on historical data and assumptions, which may not hold true in the future. With 929 out of 1,000 simulations yielding positive returns, the outlook is optimistic. To manage expectations and risks, consider reviewing the portfolio's exposure to various market conditions.

Asset classes Info

  • Stocks
    74%
  • Real Estate
    15%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset allocation is heavily weighted towards stocks at nearly 74%, with real estate at 15%, and bonds at about 10%. This mix provides growth potential through equities while maintaining some stability with bonds. Compared to benchmark norms, the allocation is equity-heavy, which can lead to higher volatility. Real estate offers diversification, but the low bond allocation may not fully cushion against market downturns. Consider increasing bond exposure or exploring alternative asset classes to enhance stability and income.

Sectors Info

  • Real Estate
    27%
  • Technology
    23%
  • Financials
    8%
  • Industrials
    7%
  • Consumer Discretionary
    6%
  • Health Care
    6%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%

The sector allocation shows a significant concentration in real estate (26.68%) and technology (22.51%). This concentration could lead to higher volatility, particularly during economic shifts affecting these sectors. While the portfolio is well-diversified across sectors, it's worth noting potential risks if these sectors face downturns. Compared to benchmark norms, this allocation is more concentrated. To reduce sector-specific risks, consider adjusting weights towards more balanced sector exposure, potentially adding to underrepresented areas like utilities or consumer defensives.

Regions Info

  • North America
    64%
  • Europe Developed
    9%
  • Japan
    5%
  • Asia Developed
    4%
  • Asia Emerging
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly in North America (63.70%), with limited exposure to Europe, Asia, and other regions. This concentration aligns with typical U.S.-focused portfolios but may limit global diversification benefits. Underexposure to emerging markets could miss out on growth opportunities. To enhance diversification and capture global growth, consider increasing allocations to regions like Asia and Latin America. Balancing geographic exposure can help mitigate risks associated with regional economic downturns.

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 is positioned near the Efficient Frontier, suggesting a favorable risk-return balance. This optimization reflects the best possible trade-off between risk and return, given the current asset mix. However, it doesn't account for other factors like diversification or personal goals. To maintain or enhance this position, consider periodic rebalancing to ensure the portfolio stays aligned with risk tolerance and market conditions. Adjusting allocations between existing assets can help maintain efficiency as market dynamics change.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Defiance Quantum 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard Real Estate Index Fund ETF Shares 4.00%
  • Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares 5.30%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.58%

The portfolio's total dividend yield is 2.58%, with notable contributions from real estate and bond holdings. Dividends provide a steady income stream, which can be particularly beneficial during market downturns. Compared to typical yields, this is moderate, reflecting a balanced approach between growth and income. For investors seeking higher income, consider increasing allocations to high-yield assets. However, it's essential to balance this with potential risks, as high yields can sometimes indicate underlying asset volatility.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Defiance Quantum 0.40%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Global ex-U.S. Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is impressively low at 0.1%, with most ETFs having minimal fees. Low costs are advantageous as they enhance net returns over time. High-cost funds can erode returns, so maintaining low fees is a positive aspect of this portfolio. Compared to industry averages, these costs are well-managed. Continue to monitor and evaluate fund fees, ensuring they remain competitive. Consider replacing any higher-cost funds with lower-cost alternatives to further improve cost efficiency.

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