A balanced and broadly diversified portfolio with a strong focus on major stock markets

Report created on May 13, 2025

Risk profile Info

4/7
Balanced
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Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

This portfolio is structured around three major ETFs, focusing predominantly on the stock market with a 99% allocation, and a minimal cash position. Its composition is heavily weighted towards the Vanguard S&P 500 ETF and the Vanguard Total International Stock Index Fund ETF Shares, each constituting 35% of the portfolio, with the remaining 30% in the Vanguard Total Stock Market Index Fund ETF Shares. This allocation suggests a balanced approach, aiming to capture growth from both U.S. and international markets. However, the overlap between the S&P 500 ETF and the Total Stock Market ETF indicates a concentration risk in U.S. equities.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.98%, with a maximum drawdown of -34.18%. This performance is indicative of a balanced risk-return profile, suitable for investors with a moderate risk tolerance. The days contributing to 90% of returns highlight the importance of staying invested over the long term, as missing these key days can significantly impact overall returns.

Projection Info

Forward projections, based on Monte Carlo simulations, offer a wide range of possible outcomes, from a 5th percentile growth of 24.3% to a 67th percentile growth of 432.7%. This underscores the inherent uncertainty in investing, emphasizing the need for a diversified portfolio to mitigate risk. However, it's important to remember that such simulations are based on historical data, which is not a guarantee of future performance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset class allocation is heavily skewed towards stocks, with a negligible cash position. This allocation is suitable for investors seeking growth over the long term, as stocks historically offer higher returns than other asset classes. However, the lack of other asset classes, such as bonds or real estate, limits opportunities for diversification and risk management.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    3%

Sector allocation is well-diversified, with technology, financial services, and consumer cyclicals leading. This sector spread is reflective of the broader market composition, particularly of the S&P 500 and the Total Stock Market. While the emphasis on technology and financial services aligns with growth opportunities, it also exposes the portfolio to sector-specific risks.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic allocation is predominantly in North America (67%), with meaningful exposure to developed Europe and emerging Asian markets. This diversified geographic spread helps mitigate region-specific risks and capitalizes on growth opportunities in different parts of the world. However, the relatively low exposure to emerging markets might limit potential high-growth opportunities.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    18%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization exposure leans heavily towards mega and big-cap stocks, which tend to be more stable and less volatile than smaller companies. This is consistent with the portfolio's balanced risk profile. However, the limited exposure to small and micro-cap stocks could mean missing out on higher growth potential these companies can offer.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The high correlation between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares suggests redundancy, as these funds have significant overlap in their holdings. This reduces the portfolio's diversification benefits, potentially increasing risk during market downturns that affect large-cap U.S. stocks disproportionately.

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.

To optimize the portfolio, consideration should be given to reducing the overlap between the S&P 500 and the Total Stock Market ETFs. Diversifying into different asset classes or sectors could also improve the risk-return profile. The Efficient Frontier analysis would suggest reallocating assets to achieve the best possible risk-return ratio, though this requires a careful review of current holdings and potential new investments.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.90%

The dividend yield of the portfolio averages 1.90%, with the international stock index fund offering a higher yield. This contributes to the portfolio's total return, providing a steady income stream in addition to capital appreciation. For investors seeking income, the international component enhances the portfolio's yield.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • 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) 0.04%

The portfolio's total expense ratio (TER) is remarkably low at 0.04%, which is advantageous for long-term growth as lower costs translate to higher net returns. This cost efficiency is a strong point, especially in a low-yield environment, making the portfolio attractive for cost-conscious investors.

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