A balanced portfolio with strong U.S. focus and moderate diversification potential

Report created on Mar 3, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of 78% stocks and 22% bonds, with a slight tilt towards equities. The largest holding is the Vanguard Total Stock Market ETF at 43.5%, followed by the Vanguard Total Bond Market ETF at 22%. The portfolio's structure aligns with a balanced approach, offering both growth and income. A comparison to a benchmark like a 60/40 stock-bond index suggests a heavier equity exposure, which could increase potential returns but also risk. Consider whether this equity bias aligns with your risk tolerance and financial goals. Adjusting the stock-bond ratio might be necessary if your risk appetite changes.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.3%. This performance is notable, especially when compared to standard benchmarks. The maximum drawdown of -28.92% highlights the portfolio's resilience in downturns. However, it's crucial to remember that past performance doesn't guarantee future results. The portfolio's ability to recover quickly from losses is a positive sign, but it's wise to prepare for potential volatility. Regularly reviewing performance against personal benchmarks can help ensure the portfolio remains aligned with your investment objectives.

Projection Info

Forward projections using Monte Carlo simulations show a median potential increase of 234.2% over the long term. With 1,000 simulations, the portfolio has a 97.5% chance of positive returns. Monte Carlo simulations use historical data to predict possible future outcomes, providing a range of potential scenarios. While these projections offer insight into potential growth, they are not foolproof and depend on historical trends. Consider these projections as one of many tools to gauge future performance. Stay informed about market trends and economic changes that might impact these projections.

Asset classes Info

  • Stocks
    78%
  • Bonds
    22%
  • Cash
    1%

The portfolio's asset allocation includes stocks at 78% and bonds at 22%, with a minor cash position. This allocation provides a solid foundation for diversification, balancing growth potential and income stability. Compared to a typical balanced portfolio, this one leans more towards equities, which can enhance returns but also increase risk. Ensuring a diverse mix within each asset class can further mitigate risks. Consider exploring additional asset classes, such as real estate or commodities, to enhance diversification and potentially improve risk-adjusted returns.

Sectors Info

  • Technology
    24%
  • Financials
    11%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation is technology-heavy at 24%, followed by financial services at 11%. While tech exposure offers growth potential, it may also introduce higher volatility, especially during interest rate fluctuations. The sector mix is well-rounded with exposure to healthcare, consumer cyclicals, and other sectors. This diversification helps mitigate sector-specific risks but could be further balanced by reducing tech concentration. Regularly reviewing sector performance and trends can help maintain a balanced allocation, ensuring the portfolio adapts to changing market conditions.

Regions Info

  • North America
    69%
  • Asia Emerging
    5%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 69%, with limited exposure to emerging markets. This concentration provides stability but may limit growth opportunities available in other regions. A comparison to global benchmarks reveals underexposure to developed and emerging markets outside North America. Diversifying geographically can reduce regional risk and enhance growth potential. Consider increasing exposure to international markets, particularly in Asia and Europe, to better capture global economic trends and opportunities.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    25%
  • Mid-cap
    14%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap companies at 34%, with significant exposure to big caps at 25%. This concentration in large companies offers stability and lower volatility. However, the limited exposure to small and micro-cap stocks may restrict growth potential. Small caps often provide higher returns but with increased risk. Balancing exposure across market capitalizations can enhance diversification and potentially improve returns. Consider gradually increasing small and mid-cap allocations to capture growth opportunities while managing risk.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. equity ETFs like Vanguard Total Stock Market, SPDR S&P 500, and Vanguard S&P 500. High correlation means these assets often move together, potentially limiting diversification benefits. In downturns, this could lead to amplified losses. Reducing overlap by selecting ETFs with different focuses or adding uncorrelated assets can enhance diversification. Consider exploring alternative funds or asset classes to reduce correlation and improve risk management, ensuring a more resilient portfolio.

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 could potentially be optimized on the Efficient Frontier, which seeks the best risk-return balance. However, the current asset correlation suggests an opportunity to enhance diversification first. The Efficient Frontier uses current assets to find the optimal risk-return ratio, but doesn't address diversification. Consider reducing overlaps and exploring uncorrelated assets to improve efficiency. Regularly reassessing the portfolio's position on the Efficient Frontier can help ensure it remains aligned with your risk tolerance and return expectations.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.30%
  • SPDR S&P 500 ETF Trust 1.20%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.89%

The portfolio's dividend yield stands at 1.89%, with higher contributions from bond and emerging market ETFs. Dividends provide a steady income stream, which can be reinvested for compounding growth. This yield aligns with a balanced approach, offering both income and growth potential. While dividends are beneficial, they should be considered alongside overall portfolio objectives. Regularly review dividend policies of holdings and adjust allocations if necessary to maintain desired income levels and growth potential.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 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 cost-effective management. Lower costs are crucial for enhancing long-term returns, as they reduce the drag on performance. This cost efficiency aligns well with best practices, ensuring more of your investment returns are retained. Regularly reviewing expense ratios and exploring lower-cost alternatives can further optimize costs. Maintaining this focus on minimizing expenses will support better long-term performance and align with your financial goals.

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