A balanced portfolio with global reach and a focus on cost-effective ETFs
Report created on Jan 11, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 80.00% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 20.00%
This portfolio is composed of two ETFs, the Vanguard Total World Stock Index Fund ETF Shares and the Vanguard S&P 500 ETF, with a weighting of 80% and 20%, respectively. It is heavily focused on equities, which aligns with a balanced risk profile. Compared to common benchmarks, this portfolio leans towards a concentrated equity exposure. While this composition offers simplicity and ease of management, diversifying into other asset classes like bonds or real estate could reduce risk and enhance stability. Consider exploring additional asset classes to balance the portfolio's risk and return more effectively.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 11.22%, which is impressive. This indicates strong past performance, especially when compared to typical market benchmarks. However, it's important to remember that past performance is not a guarantee of future results. The maximum drawdown of -34.12% signifies the potential volatility and risk involved. To mitigate such risks, consider maintaining a diversified asset allocation and periodically reviewing the portfolio's performance against benchmarks to ensure alignment with investment goals.
Projection
Using Monte Carlo simulations, the portfolio's future performance was analyzed, revealing a range of potential outcomes. This method uses historical data to simulate various market scenarios, providing a probabilistic forecast. The median simulation projects a potential growth of 375.43%, with most simulations showing positive returns. However, it's crucial to understand that these projections are not predictions and carry inherent uncertainty. Regularly reassessing the portfolio's alignment with your risk tolerance and investment goals will help manage expectations and adapt to changing market conditions.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is predominantly invested in stocks, accounting for over 99% of its composition. This heavy allocation to equities suggests a growth-oriented strategy but may expose the portfolio to higher volatility. Compared to a typical balanced portfolio, which might include bonds or alternative assets, this allocation is less diversified. To enhance risk management and reduce potential drawdowns, consider incorporating other asset classes. This could involve adding fixed-income securities or diversifying into real estate investments to create a more balanced and resilient portfolio.
Sectors
- Technology 26%
- Financials 16%
- Health Care 11%
- Consumer Discretionary 11%
- Industrials 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 4%
- Real Estate 3%
- Utilities 3%
The portfolio's sector allocation is well-diversified across major industries, with technology holding the largest share at 26.27%. This sectoral balance aligns closely with global benchmarks, suggesting a well-rounded exposure to different economic segments. However, a heavy emphasis on technology can lead to increased volatility, especially during periods of regulatory scrutiny or economic shifts. To mitigate sector-specific risks, consider periodically reviewing sector weights and adjusting them to maintain a balanced exposure that aligns with your risk appetite and market outlook.
Regions
- North America 72%
- Europe Developed 12%
- Asia Emerging 5%
- Japan 4%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is predominantly exposed to North America, which comprises 72.45% of the allocation. While this provides stability and familiarity, it limits diversification benefits from other regions. Emerging markets and regions like Asia and Europe offer growth potential and can enhance portfolio resilience against regional economic downturns. To achieve a more balanced geographic exposure, consider increasing allocations to underrepresented regions. This can help capture global growth opportunities and reduce dependency on any single market's performance.
Redundant positions
-
High correlationVanguard Total World Stock Index Fund ETF SharesVanguard S&P 500 ETF
The portfolio's assets, Vanguard Total World Stock Index Fund ETF Shares and Vanguard S&P 500 ETF, are highly correlated. This means they tend to move in the same direction, which can limit diversification benefits. During market downturns, this correlation may increase the portfolio's risk exposure. To enhance diversification, consider exploring additional assets or funds with lower correlation to existing holdings. This could involve adding investments in different asset classes or regions, thereby reducing overall portfolio risk and improving 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's current structure could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. However, the high correlation between the two ETFs suggests limited diversification benefits. Before pursuing optimization, focus on reducing asset overlap to enhance diversification. This could involve diversifying into other asset classes or regions. The goal is to achieve a balance between risk and return, ensuring the portfolio is aligned with your investment objectives and risk tolerance.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Vanguard Total World Stock Index Fund ETF Shares 2.00%
- Weighted yield (per year) 1.86%
The portfolio's overall dividend yield stands at 1.86%, with the Vanguard S&P 500 ETF contributing 1.3% and the Vanguard Total World Stock Index Fund ETF Shares at 2.0%. While dividends provide a steady income stream, the yield is relatively modest, reflecting the growth-oriented nature of the portfolio. For investors seeking income, exploring higher-yielding investments or dividend-focused funds could be beneficial. However, it's important to balance the desire for income with the potential for capital appreciation and overall risk management.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.06%
The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.06%. This is significantly lower than average, enhancing long-term returns by minimizing fees. Low costs are a key advantage, allowing more of the portfolio's returns to compound over time. While the current cost structure is efficient, it's worthwhile to periodically review fees to ensure they remain competitive. Consider exploring other low-cost investment options or negotiating fees with financial advisors to further optimize cost efficiency.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey