A balanced portfolio with strong US focus and low-cost diversified ETFs

Report created on Nov 4, 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 composed of two Vanguard ETFs, with 80% in the Total Stock Market Index Fund and 20% in the Total International Stock Index Fund. This structure leans heavily towards US equities, offering broad market exposure. Diversification is good, but the heavy US focus could mean missing out on potential growth from international markets. Consider if this allocation aligns with your global market views.

Growth Info

Historically, this portfolio has performed well, with a CAGR of 11.97%. A hypothetical investment of $10,000 would have grown significantly over time. Compared to benchmarks, this is a solid performance. However, past performance does not guarantee future results. It's important to regularly review performance in the context of changing market conditions.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a range of potential returns. With 1,000 simulations, the 50th percentile indicates a 240.2% increase, while the 5th percentile shows a 14% increase. Remember, these are estimates and real-world results can vary. Use these projections as a guide, not a guarantee.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 99% of the allocation, with a minimal 1% in cash. This concentration in equities can lead to higher returns but also increased volatility. Diversifying into other asset classes, like bonds or real estate, might reduce risk and stabilize returns during market downturns.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation shows a significant emphasis on technology at 28%, followed by financial services and consumer cyclicals. This tech-heavy tilt could result in higher volatility, especially during periods of rising interest rates. Balancing sector exposure can mitigate risks associated with sector-specific downturns.

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 predominantly focused on North America, with 81% exposure. This leaves limited exposure to emerging markets, which can offer growth opportunities. Increasing international diversification may help hedge against regional economic downturns and currency fluctuations.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization is skewed towards mega and big-cap stocks, which make up 72%. While these companies are typically more stable, they may offer lower growth potential compared to small or micro-cap stocks. Balancing market cap exposure could enhance growth opportunities and overall diversification.

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's risk-return profile can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. Adjusting allocations between the current assets could enhance efficiency. Remember, optimization focuses on maximizing returns for a given risk level, not necessarily diversification.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield stands at 1.60%, which can provide a steady income stream. While not the primary focus for growth-oriented investors, dividends can contribute to total returns and offer a buffer during market downturns. Evaluate if this yield aligns with your income goals.

Ongoing product costs Info

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

The total expense ratio (TER) of 0.04% is impressively low, minimizing costs and supporting long-term performance. Low costs are a key advantage of this portfolio, ensuring more of your returns are reinvested. Maintaining low TERs is crucial for optimizing net returns over time.

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