Balanced portfolio with strong U.S. focus and broad diversification across sectors

Report created on Mar 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is mainly composed of ETFs, with a significant 56% allocation to the Vanguard S&P 500 ETF, reflecting a strong U.S. equity bias. The remaining allocation is diversified across international stocks (20%), extended market stocks (14%), and bonds (10%). This composition provides a solid balance between growth and stability, aligning with a typical balanced portfolio benchmark. The inclusion of both U.S. and international assets aids in diversification, reducing reliance on any single market. Consider periodically reviewing asset weightings to ensure they align with long-term goals, especially if market conditions change.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 10.74%, indicating robust performance over time. However, it experienced a maximum drawdown of -32.55%, highlighting potential vulnerability during market downturns. This performance outpaces many benchmarks, suggesting effective asset selection. While past performance is promising, it's important to remember that it doesn't guarantee future returns. Maintaining a diversified approach can help mitigate future risks and capitalize on growth opportunities as markets evolve.

Projection Info

Forward projections using Monte Carlo simulations, which analyze potential future outcomes based on historical data, estimate a median return of 126.1% over the long term. With 923 out of 1,000 simulations showing positive returns, the portfolio appears resilient. However, the 5th percentile projects a potential loss of -11.7%, emphasizing the importance of a diversified strategy. While these simulations provide valuable insights, they rely on historical trends, which may not fully predict future market behavior. Regularly reviewing and adjusting the portfolio can help manage risks and capitalize on emerging opportunities.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 89% of the total allocation, with bonds making up 10% and cash 1%. This stock-heavy allocation aligns with a growth-oriented strategy, offering potential for higher returns but also increased volatility. The bond allocation adds a layer of stability, cushioning against market fluctuations. To ensure optimal diversification, consider periodically rebalancing the asset mix, especially if personal circumstances or market conditions shift. This approach helps maintain a balance between growth potential and risk management.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation is diverse, with a notable 25% in technology, followed by financial services at 14% and consumer cyclicals at 10%. This sector distribution reflects a balanced approach, though the tech concentration may lead to increased volatility during periods of interest rate changes. The broad sector exposure helps mitigate risks associated with any single industry downturn. To maintain sector balance, consider reviewing sector weightings periodically and adjusting as necessary to align with market trends and personal investment goals.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 71% of the allocation. This U.S. focus provides stability and growth potential but may increase vulnerability to regional economic shifts. The remaining exposure is spread across Europe, Asia, and other regions, enhancing diversification. While the U.S. market has performed well, consider increasing exposure to underrepresented regions to capitalize on global growth opportunities and reduce geographic concentration risk.

Market capitalization Info

  • Mega-cap
    35%
  • Large-cap
    26%
  • Mid-cap
    18%
  • Small-cap
    7%
  • Micro-cap
    2%

The portfolio's market capitalization is skewed towards mega (35%) and big (26%) companies, offering stability and lower risk. Medium-sized firms (18%) and small caps (7%) provide growth potential but may introduce volatility. This distribution aligns with a balanced investment strategy, blending stability with growth. To optimize risk-return dynamics, consider adjusting market cap allocations periodically, ensuring they align with evolving market conditions and personal risk tolerance.

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 allocation could potentially be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio for a given set of assets. This approach focuses on maximizing returns for a given level of risk. While the portfolio is already well-diversified, consider exploring optimization strategies to further enhance performance, ensuring alignment with personal risk tolerance and investment goals.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total International Bond Index Fund ETF Shares 4.10%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Extended Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.89%

The portfolio's dividend yield stands at 1.89%, with bond funds contributing significantly. Dividends provide a steady income stream, enhancing total returns, especially in low-growth environments. While the yield is modest, it aligns with a balanced strategy prioritizing growth. To maximize income potential, consider periodically reviewing dividend-paying holdings, ensuring they align with income needs and broader investment objectives.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Bond Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is a low 0.04%, reflecting cost-efficient management. Low costs are crucial for long-term performance, as they minimize the drag on returns. This efficiency aligns with best practices, ensuring more of your investment contributes to growth. Regularly reviewing and optimizing costs can further enhance returns, particularly in low-return environments, by preserving more capital for compounding.

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