Balanced Portfolio with Strong Global Diversification and Low Costs Suitable for Moderate Risk Investors

Report created on Nov 18, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three ETFs: Vanguard Total World Stock Index Fund ETF Shares, Vanguard S&P 500 ETF, and iShares India 50 ETF. With 60% in the Total World Stock ETF, 35% in the S&P 500 ETF, and 5% in the India ETF, it offers a broad diversification across global markets. This diversified approach helps spread risk across various regions and sectors, aligning well with a balanced risk profile. However, the portfolio heavily leans on stocks, which can introduce volatility. Consider adding different asset classes like bonds to further balance risk and return.

Growth Info

Historically, the portfolio has shown a commendable annual growth rate of 11.72%, which is impressive for a balanced portfolio. The maximum drawdown of -34.38% reflects some vulnerability during market downturns, emphasizing the importance of being prepared for volatility. The fact that 90% of returns were concentrated in just 28 days suggests that timing can significantly impact performance. To mitigate this, maintaining a long-term view and staying invested through market fluctuations is crucial. Diversifying further could help in cushioning against such drawdowns and smoothing returns over time.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance shows promising potential. The median projection indicates a total return of 278.74%, with a 5th percentile return of 16.64% and a 67th percentile return of 413.84%. This suggests that while the portfolio has a solid chance of substantial growth, there is also a range of possible outcomes. The simulation reinforces the importance of diversification and risk management. To enhance future performance, consider rebalancing periodically and ensuring a mix of assets that align with your risk tolerance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is almost entirely invested in stocks, with a minuscule allocation in cash and other categories. This high stock concentration can drive growth but also introduces significant risk, particularly during market downturns. For a balanced investor, incorporating bonds or other fixed-income assets could provide stability and reduce volatility. By diversifying into multiple asset classes, you can achieve a more resilient portfolio that withstands various market conditions. Consider evaluating the current asset class allocation to ensure it aligns with long-term financial goals and risk appetite.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    3%

The sector allocation is diverse, with a notable emphasis on Technology at 26.83%, followed by Financial Services and Consumer Cyclicals. This sectoral spread is beneficial in capturing growth from various parts of the economy. However, the heavy technology weighting can introduce sector-specific risks, especially in downturns affecting tech stocks. Balancing exposure across more sectors can mitigate these risks and ensure more stable returns. Regularly reviewing sector allocations and adjusting to reflect economic trends and personal risk preferences can optimize the portfolio's performance.

Regions Info

  • North America
    74%
  • Europe Developed
    9%
  • Asien Schwellenländer
    9%
  • Japan
    3%
  • Asien
    2%
  • Australasia
    1%
  • Afrika/Mittlerer Osten
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 73.62%, with smaller allocations in Europe, Asia, and other regions. This North American focus can benefit from the region's economic strength but also exposes the portfolio to region-specific risks. Diversifying more globally could reduce this concentration risk and tap into growth opportunities in other markets. Consider assessing the geographic allocation to ensure it aligns with global economic conditions and personal investment goals. A more balanced geographic spread can enhance resilience and long-term growth.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio's assets show high correlation, particularly between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. This correlation indicates that these assets often move in the same direction, reducing diversification benefits. While correlation can amplify gains, it also increases risk during downturns. To enhance diversification, explore adding uncorrelated assets that can provide stability when stocks are volatile. Regularly monitoring asset correlations and adjusting the portfolio to maintain an optimal diversification level is essential for long-term success.

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.

Before optimizing, focus on addressing the high correlation between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. Reducing overlap can enhance diversification and mitigate risk. Moving along the efficient frontier, you can achieve a riskier or more conservative portfolio by adjusting the asset mix. For a riskier portfolio, increase exposure to volatile assets. For a more conservative approach, consider adding bonds or other stable investments. Prioritize diversification and cost efficiency to optimize returns while aligning with your risk appetite and financial goals.

Dividends Info

  • iShares India 50 ETF 0.30%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Weighted yield (per year) 1.52%

The portfolio's total dividend yield stands at 1.52%, derived from the three ETFs, with the Vanguard Total World Stock Index Fund ETF Shares contributing the most at 1.8%. This yield offers a steady income stream, which can be reinvested to enhance compounding returns. While the yield is modest, it complements the growth-oriented nature of the portfolio. To potentially increase income, consider exploring higher-yielding assets or funds. However, ensure that any changes align with the overall risk profile and investment objectives, maintaining a balance between income and growth.

Ongoing product costs Info

  • iShares India 50 ETF 0.89%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.10%

With a total expense ratio of 0.1%, the portfolio is cost-efficient, primarily due to the low fees of Vanguard ETFs. Keeping investment costs low is crucial for maximizing returns over time, as high fees can erode gains. This cost-effectiveness aligns well with a balanced investment strategy, allowing more of the portfolio's returns to be retained. Continuously monitoring and managing costs can further enhance performance. Consider maintaining the focus on low-cost funds and regularly reviewing the portfolio for any opportunities to reduce expenses without compromising on diversification or returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

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