A conservative portfolio with strong treasury exposure and moderate international diversification

Report created on Dec 20, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of primarily ETFs, with a significant concentration in dividend-focused and treasury index funds. The Vanguard Dividend Appreciation ETF makes up 35% of the portfolio, followed by 40% in treasury funds split equally between long-term and short-term bonds. Additionally, 20% is allocated to gold, and 5% to Chinese equities. This composition aligns with a conservative strategy, emphasizing income and stability over aggressive growth. Compared to common benchmarks, this portfolio has a higher allocation to treasuries and precious metals, which may reduce volatility but limit growth potential. Consider evaluating if the current allocation aligns with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 6.56%, with a maximum drawdown of -18.41%. This performance reflects its conservative nature, offering steady returns while minimizing significant losses. The drawdown figure suggests that the portfolio has been relatively resilient during market downturns, which is advantageous for risk-averse investors. However, the days that make up 90% of returns being only 39 indicate a potential for concentrated performance periods. It's important to remember that past performance does not guarantee future results, and continuous monitoring is recommended.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median return of 76.14%. The analysis, based on 1,000 simulations, shows that 819 simulations resulted in positive returns. Monte Carlo simulations use historical data to model future performance, but they cannot predict market conditions accurately. The 5th percentile suggests a potential downside of -40.35%, highlighting the importance of being prepared for adverse scenarios. Regularly reviewing these projections can help in adjusting the portfolio to better meet future expectations and risk tolerance.

Asset classes Info

  • Stocks
    40%
  • Bonds
    40%
  • Other
    20%

The portfolio is diversified across three main asset classes: stocks (39.89%), bonds (39.87%), and gold (20%). This allocation provides a balance between growth and stability, with a notable emphasis on income-generating assets. Compared to typical conservative benchmarks, the allocation to gold is relatively high, offering a hedge against inflation and market volatility. However, the minimal cash allocation may limit liquidity. Consider whether this allocation aligns with your investment goals, and if necessary, adjust the balance to better suit your risk tolerance and financial objectives.

Sectors Info

  • Technology
    10%
  • Financials
    8%
  • Health Care
    6%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Consumer Discretionary
    3%
  • Basic Materials
    2%
  • Energy
    1%
  • Utilities
    1%

Sector allocation is diverse, with technology (9.52%) and financial services (8.50%) being the largest. The portfolio's sector composition matches benchmark data, which is a strong indicator of diversification. However, the exposure to consumer cyclical and defensive sectors is relatively balanced, providing a mix of stability and potential growth. The low allocation to energy and utilities may limit exposure to these traditionally stable sectors. Given sector trends, it's important to monitor economic conditions that may affect sector performance, such as interest rate changes impacting tech-heavy portfolios.

Regions Info

  • North America
    35%
  • Asia Emerging
    5%

The portfolio's geographic exposure is concentrated in North America (34.80%), with a small allocation to Asia Emerging (5.0%) and minimal exposure to Europe Developed (0.20%). This geographic distribution aligns with a conservative approach, prioritizing stability in developed markets while allowing for some growth in emerging markets. However, the limited exposure to Europe and other regions may restrict diversification benefits. Consider reviewing geographic allocations to ensure they align with your long-term investment goals and risk tolerance, potentially increasing exposure to underrepresented regions.

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 risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This optimization focuses on reallocating existing assets to achieve the most efficient balance between risk and return. While diversification is important, efficiency emphasizes maximizing returns for a given level of risk. Regularly reassessing asset allocations and making adjustments as needed can help ensure the portfolio remains optimized, aligning with your risk tolerance and investment goals over time.

Dividends Info

  • Vanguard Long-Term Treasury Index Fund ETF Shares 4.30%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 4.20%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 2.30%

The portfolio's dividend yield is 2.3%, primarily driven by treasury bonds with yields of 4.3% and 4.2%, and the Vanguard Dividend Appreciation ETF at 1.7%. Dividends provide a steady income stream, appealing to conservative investors seeking income stability. While the yield is modest, it aligns with the conservative strategy of the portfolio. Keep in mind that high dividend yields can sometimes indicate higher risk, so it's essential to balance yield with other investment goals. Consider whether the current yield meets your income needs and adjust allocations if necessary.

Ongoing product costs Info

  • Xtrackers Harvest CSI 300 China A-Shares ETF 0.65%
  • abrdn Physical Gold Shares ETF 0.17%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.10%

Portfolio costs are impressively low, with a Total Expense Ratio (TER) of 0.1%, supporting better long-term performance. The Vanguard funds have particularly low fees, which is beneficial for cost-conscious investors. The Xtrackers ETF has a higher fee, but it offers unique exposure to Chinese equities, which may justify the cost. Reducing costs can improve net returns over time, so regularly reviewing and comparing expense ratios is a good practice. Consider whether lower-cost alternatives could replace higher-fee assets without sacrificing diversification or performance.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey