A balanced portfolio with strong US equity focus and moderate international diversification

Report created on Dec 30, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio heavily leans towards equities, with 70% in the Vanguard S&P 500 ETF and 10% in Berkshire Hathaway. This indicates a substantial commitment to US large-cap stocks. The inclusion of the Vanguard Total International Stock Index Fund and the Vanguard Total Bond Market Index Fund ETFs adds some international and fixed income exposure, respectively. Compared to common benchmarks, the portfolio is equity-heavy and moderately diversified. Balancing this with more fixed-income or alternative assets could enhance stability during market downturns.

Growth Info

The portfolio's historical performance shows a CAGR of 14.26%, which is impressive and suggests strong growth potential. However, the maximum drawdown of -23.84% indicates significant volatility. This aligns with the equity-heavy nature of the portfolio. Benchmarks like the S&P 500 have similar volatility profiles, reinforcing the need for a risk management strategy. Diversifying with more stable assets could help mitigate these drawdowns in future market corrections.

Projection Info

Forward projections using Monte Carlo simulations give a median return of 305.86%, with a 50th percentile annualized return of 11.88%. This suggests the portfolio could perform well under various market conditions. However, it's important to remember that these projections rely on historical data and assumptions, which may not hold in the future. Considering adjustments to asset allocation could help align future performance with personal investment goals and risk tolerance.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The allocation is dominated by stocks at 94.74%, with a small bond allocation of 4.92%. This high equity exposure can lead to higher returns, but also increases volatility. In comparison, balanced portfolios often have a more even split between stocks and bonds to manage risk. Introducing more bonds or alternative investments could provide a cushion against market fluctuations while still allowing for growth.

Sectors Info

  • Technology
    27%
  • Financials
    21%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is heavily weighted in technology (27%) and financial services (21%), which can lead to volatility, especially with interest rate changes. While these sectors have driven growth, they also pose risks if market conditions shift. A well-diversified sector allocation could mitigate these risks. Consider spreading investments across other sectors to reduce overexposure and align with long-term goals.

Regions Info

  • North America
    85%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With 85.27% of assets in North America, the portfolio is heavily skewed towards the US market. This concentration can limit exposure to growth opportunities in other regions. While the US market has been strong, diversifying geographically could provide additional growth potential and reduce region-specific risks. Increasing allocations to emerging markets or other developed regions may enhance global 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.

Efficient Frontier analysis suggests potential optimization within the current asset mix. By adjusting allocations among existing assets, the portfolio could achieve a better risk-return ratio. This involves finding the optimal balance between risk and return based on current holdings. While not necessarily increasing diversification, it can improve efficiency, leading to potentially higher returns for the same level of risk.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.38%

The portfolio's total dividend yield is 1.38%, with contributions from the Vanguard Total Bond Market Index Fund and the Vanguard Total International Stock Index Fund ETFs. This yield provides a modest income stream, which can be beneficial for reinvestment or income generation. For those seeking higher income, exploring dividend-focused investments could enhance the yield while maintaining growth potential.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • 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's costs are impressively low, with a total TER of 0.04%. This is beneficial for long-term performance, as lower fees mean more returns are retained. Keeping costs low is a key advantage and aligns with best practices in portfolio management. Ensuring that any future investments also have low fees can help maintain this cost efficiency.

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