A well-diversified balanced portfolio with a focus on U.S. equities and tax-exempt bonds

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a medium to long-term horizon. It offers a diversified mix of equities and bonds, providing both growth potential and income. The focus on U.S. equities and tax-exempt bonds aligns with a strategy that prioritizes stability while capturing market gains. This makes it ideal for individuals looking to build wealth steadily, with a preference for cost-efficient and tax-advantaged investments. The portfolio's structure supports a balanced approach, appealing to investors who value diversification and risk management.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Vanguard Small-Cap Growth Index Fund ETF Shares
    VBK - US9229085959
    20.00%
  • Vanguard ESG International Stock
    VSGX - US9219107250
    20.00%
  • Vanguard Tax-Exempt Bond Index Fund ETF Shares
    VTEB - US9229077469
    20.00%

The portfolio is composed of 60% equities and 20% bonds, with a small cash allocation. It leans heavily on U.S. equities, primarily through the Vanguard S&P 500 ETF, which constitutes 40% of the portfolio. This composition aligns well with a balanced investment strategy, providing a mix of growth and income. Such a structure can offer stability and growth potential, although it may limit exposure to high-growth sectors or regions. To enhance diversification, consider adding more international or alternative asset classes, which could provide additional growth opportunities and risk mitigation.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 8.24%, showcasing solid performance. The maximum drawdown, or the largest peak-to-trough decline, was -29.76%, indicating potential volatility during market downturns. This performance is comparable to major market indices, suggesting that the portfolio has captured market gains effectively. While past performance is not indicative of future results, it provides a benchmark for evaluating the portfolio's resilience and growth potential. Regularly reviewing performance against benchmarks can help identify areas for improvement or adjustment.

Projection Info

Monte Carlo simulations project potential future outcomes using historical data. With 1,000 simulations, the portfolio's annualized return was 7.51%, with a 5th percentile downturn of -34.6% and a 67th percentile gain of 209.0%. These projections offer a range of possible scenarios, highlighting both potential risks and rewards. While useful, simulations are based on past data and cannot predict future market conditions with certainty. Regularly updating projections and considering new market information can help refine expectations and guide strategic adjustments.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's asset allocation consists of 79% equities and 20% bonds, with minimal cash. This mix is typical for a balanced portfolio, offering both growth potential and income generation. The heavy equity weighting may provide higher returns over the long term but can also increase volatility. Bonds offer stability and income, particularly with the inclusion of tax-exempt bonds. To further enhance diversification, consider exploring alternative asset classes like real estate or commodities, which can provide additional income streams and reduce correlation with traditional assets.

Sectors Info

  • Technology
    21%
  • Financials
    13%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Real Estate
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%

Sector allocation is diversified, with technology at 21% and financial services at 13%. This distribution reflects a strong alignment with benchmark indices, offering exposure to key growth areas. However, technology's high allocation may increase volatility, especially during interest rate changes. The presence of sectors like healthcare and consumer cyclicals provides balance and can help mitigate sector-specific risks. Regularly monitoring sector trends and adjusting allocations can optimize risk and return, ensuring alignment with evolving market conditions and personal investment goals.

Regions Info

  • North America
    61%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographic allocation is concentrated in North America at 61%, with limited exposure to other regions. This concentration can benefit from U.S. market strength but may increase vulnerability to domestic economic fluctuations. Diversifying into regions like Europe and Asia could enhance global exposure and reduce regional risk. While the portfolio includes some international equities, increasing allocations to emerging markets or other developed regions can provide growth opportunities and further diversify risk. Regularly assessing geographic allocation can help maintain a balanced global perspective.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    20%
  • Mid-cap
    17%
  • Small-cap
    13%
  • Micro-cap
    2%

The portfolio's market capitalization is well-distributed, with 27% in mega-cap, 20% in big-cap, and 17% in medium-cap stocks. This allocation provides a balance between stability and growth potential. Mega-cap stocks offer reliability and steady returns, while smaller-cap stocks can provide higher growth opportunities but with increased risk. The inclusion of small and micro-cap stocks at 13% and 2%, respectively, adds diversification but may increase volatility. Regularly reviewing market cap distribution can help ensure alignment with risk tolerance and investment goals.

Dividends Info

  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard ESG International Stock 3.10%
  • Vanguard Tax-Exempt Bond Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.96%

The portfolio's dividend yield is 1.96%, with the Vanguard ESG International Stock and Tax-Exempt Bond ETF contributing higher yields. Dividends can provide a steady income stream and enhance total returns, especially for income-focused investors. While the yield is moderate, it aligns with a balanced strategy, offering both growth and income. Regularly reviewing dividend yields and considering high-yield opportunities can help maximize income potential, supporting reinvestment or cash flow needs depending on personal financial objectives.

Ongoing product costs Info

  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard ESG International Stock 0.12%
  • Vanguard Tax-Exempt Bond Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low costs due to the use of Vanguard ETFs. Low costs can significantly enhance long-term returns by minimizing fees that erode gains. This cost efficiency is a strong advantage, supporting better performance over time. While the current costs are impressively low, regularly reviewing expense ratios and exploring cost-effective alternatives can ensure continued cost efficiency. This proactive approach helps maximize net returns and aligns with best practices for portfolio management.

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.

The portfolio can be optimized using the Efficient Frontier, which identifies the best risk-return ratio for the current asset mix. By adjusting allocations, the portfolio can achieve an optimal balance between risk and return. This optimization focuses on maximizing returns for a given level of risk, rather than diversification alone. Regularly reviewing and adjusting the portfolio in line with the Efficient Frontier can enhance performance, ensuring it meets personal risk tolerance and investment objectives effectively.

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.