Well-Diversified Balanced Portfolio with Strong Growth Potential and Moderate Costs

Report created on Dec 2, 2024

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 entirely of ETFs, with a strong focus on Vanguard offerings. The largest position is the Vanguard Value Index Fund ETF, which makes up over a third of the portfolio. The remainder consists of a mix of developed and emerging market funds, along with growth and small-cap index funds. This composition suggests a balanced approach, aiming for diversification across different market segments. The portfolio's broad diversification is a positive aspect, as it can help mitigate risks associated with specific sectors or regions.

Growth Info

Historically, the portfolio has shown a solid performance with a compound annual growth rate (CAGR) of 10.85%. However, it has also experienced a significant maximum drawdown of -35.47%, indicating potential volatility during market downturns. This performance suggests that while the portfolio can generate impressive returns, it may also be subject to substantial fluctuations. Investors should be prepared for these swings and consider their risk tolerance when evaluating the portfolio's historical performance.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, projects the portfolio's future performance with a range of potential outcomes. The simulation suggests an annualized return of 10.6%, with a majority of simulations resulting in positive returns. This indicates a strong likelihood of growth over time, though there remains a risk of underperformance in some scenarios. Monte Carlo simulations are useful for understanding the range of possible future outcomes, helping investors align their expectations with their risk tolerance and financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with over 99% of assets allocated to equities. This high allocation to stocks suggests a focus on capital appreciation rather than income generation or capital preservation. While stocks can offer substantial growth potential, they also come with increased risk compared to other asset classes like bonds or cash. Investors should consider their risk tolerance and financial goals when evaluating this asset allocation, potentially adjusting the mix to align better with their individual preferences.

Sectors Info

  • Technology
    19%
  • Financials
    18%
  • Industrials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    10%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    4%
  • Utilities
    3%

The sector allocation within the portfolio is diverse, with significant exposure to technology, financial services, and industrials. These sectors are known for their growth potential, but they can also be volatile. The portfolio also includes smaller allocations to defensive sectors like consumer staples and utilities, which can provide some stability during market downturns. This sector diversification can help balance risk and reward, though investors should monitor sector performance and make adjustments as needed to maintain alignment with their investment strategy.

Regions Info

  • North America
    70%
  • Europe Developed
    14%
  • Japan
    5%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for 70% of the allocation. The remaining exposure is spread across developed and emerging markets, including Europe, Japan, and Asia. This geographic distribution provides a mix of stability from developed markets and growth potential from emerging markets. However, the heavy North American concentration may expose the portfolio to regional risks. Investors should consider diversifying further geographically to reduce potential exposure to any single region's economic conditions.

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 optimization chart indicates potential for adjusting the risk-return profile. Moving along the efficient frontier can help achieve a more conservative or riskier portfolio. For those seeking lower risk, increasing allocation to bonds or cash might be beneficial. Conversely, risk-tolerant investors may consider enhancing equity exposure. Prioritize aligning the portfolio with personal risk tolerance and financial goals before seeking optimization. This approach ensures that the portfolio remains suitable for the investor's unique circumstances and preferences.

Dividends Info

  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard Value Index Fund ETF Shares 2.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 2.02%

The portfolio offers a moderate dividend yield of 2.02%, with contributions from various ETFs. The Vanguard FTSE Developed Markets Index Fund ETF and Vanguard Value Index Fund ETF provide higher yields, supporting income generation. While the primary focus appears to be on growth, this dividend yield can offer some income stability. Investors seeking higher income may consider adjusting their allocation to include more income-generating assets, though this could impact the portfolio's growth potential.

Ongoing product costs Info

  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is 0.05%, which is quite low and favorable for long-term investors. This low cost structure helps maximize net returns by minimizing fees that can erode investment gains over time. Vanguard's reputation for low-cost ETFs contributes positively to the portfolio's cost efficiency. Investors should remain vigilant about costs, ensuring that any future changes or additions to the portfolio maintain this low-cost advantage to optimize overall performance.

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