Balanced international stock ETF portfolio with broad diversification and moderate risk suitable for long-term growth in the USA
Report created on Dec 3, 2024Risk profile
4/7
Diversification profile
4/5
Positions
-
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 100.00%
This portfolio is entirely composed of the Vanguard Total International Stock Index Fund ETF, providing a broadly diversified investment across global markets. The ETF includes a mix of stocks from various international regions, offering exposure to both developed and emerging markets. This single ETF structure simplifies management and ensures a straightforward investment approach. However, the reliance on one fund may limit flexibility to adjust specific exposures quickly. It's important to periodically review the ETF's performance and alignment with personal investment goals, ensuring it continues to meet the desired risk and return expectations.
Growth
The historical performance of this portfolio, represented by the Vanguard Total International Stock Index Fund ETF, shows a compound annual growth rate (CAGR) of 6.55%. The maximum drawdown was -35.99%, indicating significant volatility during downturns. This performance suggests a potential for steady growth over the long term, but with exposure to market fluctuations. Understanding past performance helps set realistic expectations for future returns and risk. Regularly reviewing historical data can guide investment decisions and reinforce the importance of maintaining a long-term perspective, especially during periods of market stress.
Projection
A Monte Carlo simulation, which uses random sampling to model potential future outcomes, projected the portfolio's future performance. With 1,000 simulations, the portfolio's annualized return was 6.78%, with a 5th percentile ending at -23.2% and a median of 108.34%. This indicates a wide range of possible outcomes, emphasizing the uncertainty inherent in investing. The simulation highlights the importance of diversification and maintaining a balanced risk profile. By understanding potential future scenarios, investors can better prepare for market volatility and align their strategies with their risk tolerance and financial goals.
Asset classes
- Stocks 98%
- Cash 1%
The portfolio's asset class allocation is predominantly in stocks, with 98.49% invested in equities. A small portion is held in cash and other assets, which provides limited diversification across asset classes. This heavy tilt towards equities suggests a focus on capital appreciation, potentially leading to higher returns but also increased volatility. Investors may consider periodically reviewing their asset allocation to ensure it aligns with their risk tolerance and investment objectives. Introducing a more balanced mix of asset classes, such as bonds, could help mitigate risk and provide stability during market downturns.
Sectors
- Financials 21%
- Industrials 15%
- Technology 13%
- Consumer Discretionary 11%
- Health Care 9%
- Basic Materials 8%
- Consumer Staples 7%
- Telecommunications 6%
- Energy 5%
- Real Estate 3%
- Utilities 3%
Sector allocation within the Vanguard Total International Stock Index Fund ETF is well-diversified, with significant exposure to financial services, industrials, and technology. These sectors represent the largest portions of the portfolio, offering potential growth opportunities and stability. A broad sector allocation can help mitigate risks associated with individual sectors' performance. Regularly reviewing sector performance and trends can provide insights into potential growth areas and risks. Maintaining a diverse sector allocation can enhance the portfolio's resilience against sector-specific downturns and contribute to long-term growth.
Regions
- Europe Developed 39%
- Asia Emerging 16%
- Japan 16%
- Asia Developed 10%
- North America 8%
- Australasia 5%
- Africa/Middle East 3%
- Latin America 2%
- Europe Emerging 1%
Geographically, the portfolio is diversified across several regions, with the largest allocations in Europe Developed, Asia Emerging, and Japan. This geographic spread offers exposure to different economic cycles and growth opportunities, reducing reliance on any single region. The inclusion of both developed and emerging markets provides a balance between stability and potential high-growth opportunities. Monitoring geographic allocation can help identify shifts in economic conditions and opportunities. Adjusting geographic exposure in response to changing global dynamics can enhance diversification and align the portfolio with global growth trends.
Dividends
- Vanguard Total International Stock Index Fund ETF Shares 3.00%
- Weighted yield (per year) 3.00%
The Vanguard Total International Stock Index Fund ETF offers a dividend yield of 3.0%, providing a steady income stream alongside capital appreciation. This yield can be appealing for investors seeking both growth and income. Dividends contribute to total returns and can help offset market volatility. Reinvesting dividends can enhance compounding over time, boosting long-term growth. Monitoring dividend yields and payout stability is crucial, as changes can impact income expectations. Ensuring a balance between dividend income and growth potential aligns the portfolio with financial goals and risk tolerance.
Ongoing product costs
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.08%
The portfolio's cost structure is efficient, with a Total Expense Ratio (TER) of 0.08% for the Vanguard Total International Stock Index Fund ETF. This low-cost approach minimizes the impact of fees on overall returns, allowing more of the investment's growth to benefit the investor. Keeping investment costs low is a key principle for maximizing returns over the long term. Regularly reviewing expense ratios and comparing them with similar funds can ensure cost-effectiveness. Maintaining a focus on low-cost investments supports financial goals and enhances portfolio performance.
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