A secure and highly liquid portfolio with a conservative stance and minimal equity exposure

Report created on Aug 2, 2025

Risk profile Info

1/7
Secure
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is predominantly composed of the Vanguard Federal Money Market Fund, accounting for 87.14% of the total, indicating a highly conservative investment stance. The remainder is distributed among four equity ETFs, each representing a different segment of the stock market, albeit with small allocations. This composition suggests a primary focus on capital preservation with a minimal appetite for risk and growth.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 3.50%, with a maximum drawdown of -6.91%. These figures reflect the portfolio's conservative nature, prioritizing stability over high returns. The days contributing most to returns are relatively few, highlighting the low volatility and steady, albeit modest, growth trajectory of this investment approach.

Projection Info

Using Monte Carlo simulations, which forecast potential outcomes based on historical data, the portfolio's future performance appears cautiously optimistic. With 997 out of 1,000 simulations predicting positive returns, the median projection suggests a substantial increase. However, it's crucial to remember that these simulations are speculative and do not guarantee future results.

Asset classes Info

  • Stocks
    13%

The asset allocation is heavily skewed towards cash equivalents, with a minor portion in equities. This allocation significantly reduces the portfolio's volatility but also limits its growth potential. Diversification across asset classes is minimal, which might not be suitable for those seeking balanced growth or inflation protection over the long term.

Sectors Info

  • Technology
    5%
  • Financials
    2%
  • Health Care
    1%
  • Industrials
    1%
  • Consumer Staples
    1%
  • Consumer Discretionary
    1%
  • Telecommunications
    1%

The equity portion of the portfolio is spread across several sectors, with technology receiving the highest allocation. This sectoral distribution provides some level of diversification within the small equity component. However, the overall impact on the portfolio's diversification is limited due to the predominant allocation to the money market fund.

Regions Info

  • North America
    13%

Geographic exposure is concentrated in North America, reflecting a home bias that is common in conservative portfolios. This focus minimizes international risks but also limits exposure to potentially higher growth markets abroad. Expanding geographic diversification could enhance returns and reduce region-specific risks.

Market capitalization Info

  • Mega-cap
    6%
  • Large-cap
    5%
  • Mid-cap
    2%
  • Small-cap
    1%

The equity investments favor larger companies, as indicated by the allocations to mega and big market capitalizations. This preference supports the portfolio's conservative stance, as larger companies tend to be more stable than their smaller counterparts. However, this also means missing out on the potentially higher growth rates of smaller firms.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The equity ETFs in the portfolio show high correlation, particularly those tracking the S&P 500, dividend appreciation, and the total stock market. This redundancy limits the benefits of diversification, as these assets are likely to react similarly to market changes. Reducing overlap could improve the portfolio's risk-adjusted returns.

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.

Optimizing the portfolio for a more efficient risk-return ratio suggests potential for higher expected returns at a similar risk level. However, achieving this requires addressing the high correlation among equity holdings and reconsidering the overwhelming allocation to the money market fund. Balancing risk and return more effectively could significantly enhance portfolio performance.

Dividends Info

  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Federal Money Market Fund Investor Shares 3.80%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 3.48%

Dividend yields contribute to the portfolio's total return, with the money market fund offering the highest yield. While dividends provide a steady income stream, the overall yield is reflective of the portfolio's conservative risk profile. For investors seeking higher income, reallocating towards higher-yielding equities could be beneficial, albeit at increased risk.

Ongoing product costs Info

  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.01%

The portfolio benefits from low total expense ratios (TERs), enhancing its efficiency by minimizing costs. This is crucial for a conservative portfolio, where the primary goal is capital preservation, and every basis point saved improves net returns. Maintaining a focus on low-cost investments supports better long-term performance.

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