A balanced diversified portfolio with a focus on US equities and low expense ratio

Report created on Jan 21, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three Vanguard ETFs, with 60% in US stocks, 25% in bonds, and 15% in international stocks. This allocation reflects a balanced approach, prioritizing growth with a significant allocation to equities while maintaining a strong bond component for stability. Compared to common benchmarks, this mix is typical for a balanced portfolio, offering a good blend of risk and return. The allocation leans towards equities, which may suit investors seeking moderate growth over time. Consider periodically rebalancing to maintain this structure as market conditions change, ensuring alignment with long-term goals.

Growth Info

Historically, this portfolio has delivered a solid CAGR of 9.47%, indicating strong growth over time. The max drawdown of -28.52% highlights potential volatility, especially during market downturns. This performance, compared to common benchmarks, suggests competitive returns with some risk exposure. Understanding past performance helps set realistic expectations, but remember that historical data doesn't guarantee future results. To mitigate potential drawdowns, consider maintaining a diversified asset mix and periodically reviewing allocation to ensure it aligns with your risk tolerance and investment goals.

Projection Info

The Monte Carlo simulation projects an annualized return of 7.40% with a wide range of outcomes, reflecting market uncertainties. With 937 out of 1,000 simulations showing positive returns, this suggests a high probability of growth. The 5th percentile outcome of -3.4% indicates potential downside risk, while the 67th percentile projects 211% growth. Monte Carlo simulations use historical data to model future possibilities, but it's important to remember that they can't predict exact outcomes. Regularly reviewing projections and adjusting your strategy as needed can help manage expectations and align with long-term goals.

Asset classes Info

  • Stocks
    74%
  • Bonds
    25%
  • Cash
    1%

The portfolio is diversified across two major asset classes: 74% in stocks and 25% in bonds. This allocation aims to balance growth potential with stability, a common strategy for balanced investors. Compared to benchmark norms, this mix is typical for a balanced approach, offering moderate risk and return. Diversification across asset classes helps spread risk, reducing the impact of poor performance in one area. To maintain this balance, consider periodically reviewing and rebalancing your portfolio as market conditions change, ensuring it aligns with your risk tolerance and investment objectives.

Sectors Info

  • Technology
    21%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a strong emphasis on technology at 21%, followed by financial services and consumer cyclicals. This tech-heavy focus aligns with current market trends but may lead to increased volatility during interest rate hikes. Compared to common benchmarks, this sector mix is fairly typical, offering exposure to growth-oriented industries. Understanding sector allocation helps manage risk and capitalize on industry trends. To ensure balanced exposure, consider periodically reviewing sector weights and adjusting as needed, keeping in mind your risk tolerance and long-term goals.

Regions Info

  • North America
    61%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is primarily concentrated in North America at 61%, with limited exposure to other regions. This allocation provides stability but may lack diversification benefits from global markets. Compared to common benchmarks, the portfolio is heavily tilted towards US equities, which can be advantageous in strong domestic markets. However, diversifying geographically can help mitigate risks associated with regional economic downturns. Consider evaluating your geographic allocation and potentially increasing exposure to international markets, ensuring a balanced approach that aligns with your risk tolerance and investment goals.

Market capitalization Info

  • Mega-cap
    31%
  • Large-cap
    23%
  • Mid-cap
    14%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards mega and big caps, comprising 54% of the allocation. This focus on larger companies typically offers stability and lower volatility compared to smaller-cap stocks. While this aligns with common benchmarks, it may limit growth potential found in smaller, emerging companies. Understanding market cap exposure helps assess risk and growth opportunities. To enhance diversification, consider reviewing your allocation across different market caps, potentially increasing exposure to small and medium-sized companies if it aligns with your risk tolerance and investment strategy.

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 using the Efficient Frontier, which focuses on achieving the best risk-return ratio with the current assets. This approach ensures that the portfolio is well-positioned for growth while managing risk. While the current allocation is balanced, exploring optimization opportunities can enhance performance. Consider periodically reviewing your portfolio's position on the Efficient Frontier and making adjustments as needed, ensuring it aligns with your risk tolerance and long-term investment strategy. This proactive approach can help maximize returns while minimizing risk.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.14%

The portfolio's dividend yield stands at 2.14%, with the bond ETF contributing significantly. Dividends can provide a steady income stream, appealing to investors seeking regular cash flow. Compared to typical benchmarks, this yield is competitive, offering a blend of growth and income. Understanding dividend contributions helps assess total returns and align with income goals. For those prioritizing income, consider maintaining or increasing exposure to dividend-paying assets, ensuring it aligns with your risk tolerance and overall investment strategy.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock 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 Vanguard's cost-effective approach. Lower costs enhance long-term returns by reducing the drag on performance. Compared to typical benchmarks, these costs are highly competitive, supporting better net results. Understanding costs helps evaluate investment efficiency and maximize returns. To maintain cost-effectiveness, consider regularly reviewing expense ratios and exploring lower-cost alternatives if available, ensuring alignment with your investment goals and financial objectives.

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