Balanced portfolio with strong growth potential and an emphasis on US markets
Report created on Jun 8, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
VO Vanguard S&P 500 Growth Index Fund ETF Shares
VOOG - US9219325050 47.50% -
VT Vanguard Total Stock Market Index Fund Admiral Shares
VTSAX - US9229087286 17.50% -
VV VANGUARD VALUE INDEX FUND ADMIRAL SHARES
VVIAX - US9229086783 17.50% -
VW Vanguard Wellesley Income Fund
VWINX - US9219381061 17.50%
This portfolio is predominantly invested in stocks, with a significant portion in the Vanguard S&P 500 Growth Index Fund ETF Shares (47.5%), showcasing a focus on growth within the US market. The inclusion of the Vanguard Total Stock Market Index Fund Admiral Shares (17.5%), Vanguard Value Index Fund Admiral Shares (17.5%), and Vanguard Wellesley Income Fund (17.5%) offers a blend of total market exposure, value-oriented assets, and income-generating investments. This composition suggests a balanced approach, aiming to capitalize on growth while mitigating risks through value and income strategies.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.00%, with a maximum drawdown of -30.81%. This indicates strong past performance, albeit with significant volatility. The days contributing to 90% of returns being concentrated in 31.0 days highlights the portfolio's susceptibility to short-term market movements, underlining the importance of a long-term investment horizon to navigate through periods of volatility effectively.
Projection
Monte Carlo simulations, using 1,000 iterations, project a wide range of outcomes with a median increase of 333.4%, suggesting robust growth potential. However, the significant spread between the 5th and 67th percentiles (41.7% to 471.5%) underscores the inherent uncertainty in forecasting, emphasizing the need for investors to prepare for various market conditions. These projections, while useful for planning, should be viewed as one of many tools, given their reliance on historical data, which is not a guaranteed predictor of future performance.
Asset classes
- Stocks 89%
- Bonds 11%
The portfolio's allocation is heavily skewed towards stocks (89%) with a smaller allocation in bonds (11%), reflecting a growth-oriented strategy with a moderate cushion against market downturns. This asset class distribution aligns with the portfolio's balanced risk profile, aiming to achieve higher returns through equities while using bonds to provide income and reduce overall volatility.
Sectors
- Technology 27%
- Financials 16%
- Health Care 11%
- Telecommunications 9%
- Industrials 9%
- Consumer Staples 7%
- Consumer Discretionary 6%
- Energy 4%
- Consumer Discretionary 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
Sector allocation is diverse, with a notable emphasis on Technology (27%) and Financial Services (16%), followed by Healthcare and Communication Services. This sectoral spread indicates a bias towards industries with high growth potential but also comes with sector-specific risks, such as regulatory changes or economic cycles affecting financial services and technology companies disproportionately.
Regions
- North America 98%
- Europe Developed 2%
Geographic allocation is heavily concentrated in North America (98%), with minimal exposure to developed European markets (2%) and no presence in emerging or other developed Asian markets. This concentration enhances exposure to the US economy's growth prospects but also increases vulnerability to region-specific economic and political risks.
Market capitalization
- Mega-cap 43%
- Large-cap 28%
- Mid-cap 16%
- Small-cap 1%
The portfolio's market capitalization exposure leans heavily towards mega (43%) and big (28%) cap stocks, with lesser exposure to medium and minimal to small and micro caps. This skew towards larger companies may contribute to stability and lower volatility but could also limit potential high-growth opportunities from smaller cap investments.
Redundant positions
-
High correlationVanguard S&P 500 Growth Index Fund ETF SharesVanguard Total Stock Market Index Fund Admiral Shares
The significant overlap between the Vanguard S&P 500 Growth Index Fund ETF Shares and the Vanguard Total Stock Market Index Fund Admiral Shares indicates a high correlation, potentially diminishing diversification benefits. Reducing redundancy within the portfolio could enhance its efficiency by ensuring each investment contributes uniquely to the portfolio's risk and return profile.
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's current asset allocation suggests room for optimization, particularly by addressing the high correlation between certain holdings. By diversifying more effectively across different assets, sectors, or geographies, the portfolio could achieve a more favorable risk-return profile, potentially moving closer to the Efficient Frontier, where the portfolio achieves the highest expected return for a given level of risk.
Dividends
- Vanguard S&P 500 Growth Index Fund ETF Shares 0.50%
- Vanguard Total Stock Market Index Fund Admiral Shares 1.30%
- VANGUARD VALUE INDEX FUND ADMIRAL SHARES 2.30%
- Vanguard Wellesley Income Fund 6.50%
- Weighted yield (per year) 2.00%
The portfolio's dividend yield strategy, averaging at 2.00%, combines growth with income generation. The higher yield of the Vanguard Wellesley Income Fund (6.50%) balances the lower yields from growth-focused investments, providing a steady income stream alongside capital appreciation, which can be particularly valuable in volatile or bear markets.
Ongoing product costs
- Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
- Vanguard Total Stock Market Index Fund Admiral Shares 0.04%
- VANGUARD VALUE INDEX FUND ADMIRAL SHARES 0.05%
- Vanguard Wellesley Income Fund 0.23%
- Weighted costs total (per year) 0.10%
With an overall Total Expense Ratio (TER) of 0.10%, the portfolio benefits from relatively low costs, maximizing net returns to the investor. This cost efficiency is crucial for long-term growth, as even small differences in fees can significantly impact compounded returns over time.
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