Balanced portfolio with a strong focus on US stocks and minimal cash holdings
Report created on Jul 16, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 72.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 18.00% -
VM Vanguard Federal Money Market Fund Investor Shares
VMFXX - US9229063006 10.00%
This portfolio primarily consists of two Vanguard ETFs that cover the total stock market in the U.S. and internationally, alongside a small allocation to a money market fund for liquidity. The heavy weighting towards the Vanguard Total Stock Market Index Fund ETF Shares at 72% indicates a strong bias towards U.S. equities, while the 18% in international stocks offers some global exposure. The 10% in the Vanguard Federal Money Market Fund provides a cash buffer, which is essential for risk management and liquidity purposes. This composition suggests a strategy that leans towards growth while maintaining a cushion for market volatility.
Growth
Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 11.42%, with a notable maximum drawdown of -32.41%. These figures suggest that the portfolio has experienced significant growth, albeit with periods of substantial declines. The days contributing to 90% of returns being concentrated in just 27 days highlights the impact of short-term market movements on performance. This volatility underscores the importance of a long-term investment horizon and the potential need for rebalancing to manage risk effectively.
Projection
Monte Carlo simulations, which use historical data to project future outcomes, show a wide range of potential results for this portfolio. With 947 out of 1,000 simulations resulting in positive returns, the median projected growth is promising. However, the 5th percentile outcome indicates a potential for loss, highlighting the importance of understanding the inherent uncertainties in market projections. These simulations serve as a reminder that while historical data can guide expectations, they do not guarantee future performance.
Asset classes
- Stocks 89%
- Cash 1%
The portfolio's allocation is heavily skewed towards stocks (89%), with a minimal cash component (1%), and lacks exposure to other asset classes such as bonds or real estate directly. This concentration in stocks is conducive to growth but also increases susceptibility to market volatility. Diversifying across different asset classes can help mitigate risk and smooth out returns over time, especially during stock market downturns.
Sectors
- Technology 24%
- Financials 14%
- Health Care 10%
- Consumer Discretionary 9%
- Industrials 9%
- Telecommunications 7%
- Consumer Staples 5%
- Energy 3%
- Basic Materials 3%
- Real Estate 3%
- Utilities 2%
The sector allocation is concentrated in technology (24%), financial services (14%), and healthcare (10%), which are sectors that can offer significant growth opportunities. However, this concentration also exposes the portfolio to sector-specific risks. Diversifying more evenly across sectors can reduce volatility and improve the portfolio's resilience to industry-specific downturns.
Regions
- North America 73%
- Europe Developed 7%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
With 73% of assets in North America, the portfolio has a strong home bias towards the U.S. market. While this focus has historically offered substantial growth opportunities, it also exposes investors to regional economic and political risks. Increasing exposure to developed and emerging markets outside of North America could enhance diversification and potentially tap into growth opportunities in other regions.
Market capitalization
- Mega-cap 38%
- Large-cap 27%
- Mid-cap 17%
- Small-cap 5%
- Micro-cap 2%
The portfolio's market capitalization breakdown shows a preference for mega (38%) and big (27%) cap stocks, which are typically less volatile than smaller companies. However, this focus may limit exposure to the higher growth potential often found in medium, small, and micro-cap stocks. Incorporating a broader range of market caps could enhance growth prospects and diversification.
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 current allocation appears to be positioned towards the growth end of the Efficient Frontier, indicating a focus on maximizing returns for a given level of risk. However, there may be opportunities to optimize further by adjusting the asset allocation to achieve an even better risk-return ratio. Re-evaluating the balance between U.S. and international stocks, as well as incorporating other asset classes, could help in this optimization process.
Dividends
- Vanguard Federal Money Market Fund Investor Shares 4.20%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.79%
The dividend yields from the ETFs contribute to the portfolio's total return, with the money market fund offering a higher yield at 4.20%. These dividends provide a steady income stream, which can be particularly beneficial in volatile or declining markets. Reinvesting dividends can compound growth over time, but investors might also consider the role of income in their overall investment strategy.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.03%
The portfolio benefits from low costs, with Total Expense Ratios (TER) for the ETFs being remarkably low. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Keeping costs low is a critical component of successful long-term investing, as high fees can significantly erode returns over time.
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