Balanced approach with a global diversification focus and low-cost ETFs
Report created on Jul 31, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 60.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 40.00%
The portfolio is composed of two Vanguard ETFs: 60% in the Total Stock Market Index Fund and 40% in the Total International Stock Index Fund. This allocation reflects a balanced approach, leaning slightly more towards domestic markets but maintaining significant international exposure. The diversification is broad, covering a wide range of sectors and geographies, which aligns with the portfolio's risk classification as balanced. The simplicity of this two-fund portfolio offers a straightforward yet effective strategy for achieving global stock market exposure.
Growth
Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.54%, with a maximum drawdown of -34.45%. The days contributing to 90% of the returns amount to 26, indicating that while the portfolio has experienced significant volatility, its overall trajectory has been upward. This performance, especially the CAGR, suggests that the portfolio has managed to capture the growth potential of the stock markets effectively, despite periods of downturns.
Projection
Monte Carlo simulations, which use historical data to forecast potential future outcomes, suggest a wide range of possible performance scenarios for this portfolio. With 965 out of 1,000 simulations showing positive returns, the median projection indicates a potential 281.9% increase, underscoring the portfolio's strong growth prospects. However, it's important to remember that these simulations are based on past data and cannot guarantee future results.
Asset classes
- Stocks 99%
- Cash 1%
The allocation across asset classes shows a heavy emphasis on stocks (99%) with a minimal cash holding (1%). This composition is typical for portfolios designed for growth over the long term, reflecting a higher risk tolerance. The almost exclusive focus on equities means the portfolio's performance is closely tied to stock market movements, offering higher potential returns at the cost of increased volatility.
Sectors
- Technology 24%
- Financials 18%
- Industrials 12%
- Consumer Discretionary 11%
- Health Care 9%
- Telecommunications 8%
- Consumer Staples 6%
- Basic Materials 4%
- Energy 4%
- Real Estate 3%
- Utilities 3%
Sector allocation reveals a diversified spread, with the largest exposures in Technology (24%), Financial Services (18%), and Industrials (12%). This sectoral distribution is reflective of the broader market composition and suggests a balanced approach to capturing growth across different industries. However, the significant weight in technology and financial services sectors may introduce sector-specific risks, such as higher volatility during economic downturns.
Regions
- North America 63%
- Europe Developed 16%
- Asia Emerging 6%
- Japan 6%
- Asia Developed 4%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is predominantly invested in North America (63%), with considerable allocations to developed Europe (16%) and emerging Asia (6%). This global distribution enhances diversification, reducing the risk of significant losses from regional downturns. However, the modest exposure to emerging markets and specific regions like Latin America and Africa/Middle East might limit potential high-growth opportunities in these areas.
Market capitalization
- Mega-cap 42%
- Large-cap 31%
- Mid-cap 18%
- Small-cap 5%
- Micro-cap 1%
The market capitalization breakdown shows a preference for larger companies, with 42% in mega-cap and 31% in large-cap stocks. This bias towards bigger, more established companies can offer stability and lower volatility but may also limit exposure to the higher growth potential of smaller firms. Medium, small, and micro caps together constitute 24% of the portfolio, providing some balance in this regard.
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 appears well-positioned on the Efficient Frontier, indicating an optimized risk-return balance based on historical data. This balance suggests that, given the existing assets, the portfolio is achieving a near-optimal combination of risk and return. However, continuous review and adjustment are necessary to maintain this optimization, especially as market conditions change.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.84%
The dividend yields from the two ETFs contribute to the portfolio's income, with a combined yield of 1.84%. This yield provides a modest but steady income stream, which can be particularly beneficial in market downturns or for investors seeking regular income. The higher yield from the international fund suggests a tilt towards value-oriented or higher-dividend stocks outside the U.S.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.04%
With a total expense ratio (TER) of 0.04%, the portfolio benefits from very low costs, which is crucial for maximizing long-term returns. Lower costs mean more of the investment's return is retained by the investor, a significant advantage, especially over extended periods. This cost efficiency is a strong feature of the portfolio, supporting better performance relative to more expensive alternatives.
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