A balanced portfolio with strong US focus and moderate international diversification

Report created on Dec 25, 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 primarily comprises three ETFs: Vanguard S&P 500 ETF (80%), Vanguard Total International Stock Index Fund ETF Shares (15%), and Vanguard Small-Cap Index Fund ETF Shares (5%). This composition leans heavily towards US equities, with a smaller allocation to international stocks. Compared to common benchmarks, this portfolio is more concentrated in US large-cap stocks. A more balanced approach could be achieved by increasing exposure to international markets, which may enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 12.72%, which is impressive. However, it also experienced a maximum drawdown of -34.31%, indicating potential volatility. The strong past performance suggests robust growth, but it's essential to remember that past performance doesn't guarantee future results. To mitigate potential downturns, consider diversifying further or incorporating less volatile asset classes.

Projection Info

The Monte Carlo simulation, which uses historical data to project future performance, indicates a median expected return of 246.37%. The simulation's wide range of outcomes reflects inherent market uncertainties. While the median projection is promising, it’s crucial to prepare for less favorable scenarios. Regularly reviewing asset allocation and adjusting based on market conditions can help manage risk and align with your investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.58% in equities and minimal allocations to other asset classes. This concentration can lead to higher volatility, especially during market downturns. While equities offer growth potential, diversifying into other asset classes like bonds or real estate could stabilize returns. Balancing the portfolio with mixed asset types might reduce risk and improve resilience against market fluctuations.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    3%

The portfolio is well-diversified across sectors, with significant allocations in technology (29.17%), financial services (14.15%), and healthcare (10.86%). This sectoral balance aligns closely with benchmark indices, indicating healthy diversification. However, a technology-heavy portfolio might face higher volatility during periods of regulatory change or economic downturns. Monitoring sector trends and adjusting allocations can help manage sector-specific risks.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is predominantly in North America (85.67%), with limited allocations to other regions. This US-centric focus may limit diversification benefits and expose the portfolio to regional economic risks. Increasing exposure to emerging markets or other developed regions could enhance diversification and provide access to different growth opportunities. Evaluating global economic trends can guide geographic rebalancing.

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 along the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weightings of the existing assets to maximize returns for a given level of risk. While the current allocation is efficient, exploring optimization techniques can further enhance performance. Regular portfolio reviews can ensure alignment with risk tolerance and investment goals.

Dividends Info

  • Vanguard Small-Cap Index Fund ETF Shares 0.90%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.00%

The portfolio's overall dividend yield is 1.0%, with the Vanguard Total International Stock Index Fund ETF Shares offering the highest yield at 1.6%. While dividends contribute to total returns, the portfolio’s focus appears more growth-oriented. For investors seeking income, increasing allocations to higher-yielding assets might be beneficial. Evaluating dividend growth potential can also enhance income stability over time.

Ongoing product costs Info

  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • 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 benefits from impressively low costs, with a total expense ratio (TER) of 0.04%. This cost efficiency supports better long-term performance by preserving more of the returns. Maintaining low costs is a critical factor in maximizing net returns. Periodically reviewing expense ratios and considering lower-cost alternatives can ensure ongoing cost-effectiveness and enhance overall portfolio performance.

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