A balanced portfolio with strong diversification and substantial exposure to global markets

Report created on Mar 28, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of three Vanguard ETFs, with a significant 60% allocation to the S&P 500 ETF. This is complemented by 20% allocations each to developed and emerging markets ETFs. This structure leans heavily on equities, providing a robust platform for growth. Comparing this to a benchmark, the portfolio is well-diversified across major global indices, which helps spread risk. The heavy emphasis on the S&P 500 suggests a strong confidence in the U.S. market. Consider whether this aligns with your long-term views, and monitor for any shifts in global economic conditions that might warrant adjustments to maintain balance.

Growth Info

Historically, the portfolio has demonstrated a strong Compound Annual Growth Rate (CAGR) of 10.69%, indicating a solid performance over the long term. The maximum drawdown of -33.52% reflects the inherent volatility in equity-heavy portfolios, especially during market downturns. When compared to a benchmark, this performance suggests a resilience and ability to recover post-crisis. While past performance is not indicative of future results, these metrics provide confidence in the portfolio's ability to generate returns. Regularly reviewing performance against benchmarks can help ensure continued alignment with your financial goals.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, the portfolio shows promising forward projections. With 1,000 simulations, the median outcome suggests a potential growth of 191.1%, while the best-case scenario could reach 280.6%. However, the 5th percentile indicates a possible decline of -8.3%. These projections highlight the range of possible outcomes and underscore the importance of maintaining a diversified approach. It's crucial to remember that these are estimates, and real-world results may vary due to unforeseen market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards equities, with 99% in stocks and a negligible 1% in cash. This allocation aligns with a growth-focused strategy but may expose the portfolio to higher volatility. Compared to typical benchmark allocations, this is more aggressive, offering potential for higher returns but also increased risk. Diversification within asset classes can help mitigate some of this risk. Consider whether introducing other asset classes, such as bonds or real estate, might provide additional stability and balance to the portfolio.

Sectors Info

  • Technology
    25%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is well-distributed, with technology leading at 25%, followed by financial services at 17%. This mirrors common benchmarks, suggesting a balanced sector exposure. However, the technology-heavy component could introduce volatility, especially during periods of interest rate changes. The diversity across sectors like healthcare, consumer cyclicals, and industrials helps cushion against sector-specific downturns. Regularly reviewing sector performance and trends can help in making informed decisions on whether to adjust allocations to capitalize on emerging opportunities or mitigate risks.

Regions Info

  • North America
    62%
  • Asia Emerging
    12%
  • Europe Developed
    11%
  • Asia Developed
    5%
  • Japan
    4%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America at 62%, with significant exposure to Asia and Europe. This mix provides a good balance of developed and emerging markets, aligning closely with global benchmarks. The exposure to emerging markets, though smaller, offers growth potential but also higher risk. This geographic diversification helps mitigate region-specific risks and capitalizes on global growth opportunities. Continuously monitoring geopolitical and economic developments can help in adjusting geographic allocations to maintain optimal diversification and risk management.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    33%
  • Mid-cap
    17%
  • Small-cap
    2%

The portfolio's market capitalization is skewed towards mega and big caps, comprising 79% of the allocation. This reflects a preference for stability and established companies, which typically offer lower volatility. Medium and small caps, while smaller in allocation, can provide higher growth potential and diversification benefits. Compared to benchmarks, this allocation is conservative but aligns with a balanced risk approach. Consider whether increasing exposure to smaller caps could enhance growth potential, keeping in mind the trade-off between risk and return.

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 is currently well-aligned with the Efficient Frontier, which represents the best possible risk-return ratio given the current assets. This means the portfolio is optimized for maximum return for the level of risk taken. However, optimization is based on historical data and current asset allocation, which may not account for future market changes. Regularly revisiting the portfolio's position on the Efficient Frontier can help ensure it remains optimized as market conditions evolve and personal financial goals change.

Dividends Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.82%

The portfolio offers a modest dividend yield of 1.82%, with the highest contributions from the emerging markets and developed markets ETFs. Dividends provide a steady income stream and can be a buffer during market volatility. For investors seeking income, the current yield may seem low, but it complements the growth-focused nature of the portfolio. Reinvesting dividends can enhance compounding returns over time. Evaluate whether increasing dividend-focused investments aligns with your income needs and long-term goals.

Ongoing product costs Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, reflecting the cost-efficiency of Vanguard ETFs. Low costs are crucial for maximizing long-term returns, as they minimize the drag on performance. This aligns well with best practices of cost management in investment portfolios. Regularly reviewing and comparing expense ratios can ensure that the portfolio remains cost-effective, especially if considering adding new funds or making changes to the asset allocation.

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