A globally diversified single-fund portfolio with a balanced risk profile and low costs

Report created on Dec 30, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed entirely of the Vanguard Total World Stock Index Fund ETF, representing a single asset class: equities. This provides exposure to a broad range of global stocks. While this simplicity offers ease of management, it lacks diversification across different asset classes like bonds or real estate, which could help mitigate risk. A balanced portfolio typically includes a mix of asset classes to reduce volatility. Consider incorporating other asset classes to enhance diversification and potentially improve risk-adjusted returns.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.57%, indicating robust growth over time. This performance is impressive, especially when compared to typical benchmarks. However, it's important to note the maximum drawdown of -34.25%, which reflects the potential for significant losses during market downturns. While past performance is not indicative of future results, understanding these metrics helps set realistic expectations. Diversifying across asset classes could reduce the impact of such downturns.

Projection Info

Forward projections using Monte Carlo simulations show an annualized return of 11.43%, with most scenarios resulting in positive returns. These simulations use historical data to predict future outcomes, but they are not guarantees. The wide range of potential outcomes—from a 5th percentile return of 30.15% to a 67th percentile return of 415.83%—highlights the inherent uncertainty and risk. Diversifying into other asset classes could help stabilize returns and reduce reliance on equity market performance alone.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with minimal cash and other assets. This concentration in equities aligns with a growth-oriented strategy but may expose the portfolio to higher volatility. In comparison, balanced portfolios often include bonds or other fixed-income securities to provide stability and income. Consider introducing fixed-income assets to reduce volatility and provide a buffer during market downturns, potentially improving the portfolio's risk-return profile.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is broad, with significant exposure to technology, financial services, and industrials. This diversity helps mitigate risks associated with sector-specific downturns. However, the heavy weighting in technology could lead to increased volatility if this sector faces challenges, such as regulatory changes or economic shifts. Regularly reviewing sector exposures and adjusting as needed can help maintain balance and capitalize on emerging trends or opportunities in underrepresented sectors.

Regions Info

  • North America
    66%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is diverse, with a strong focus on North America, followed by Europe and Asia. This provides exposure to a range of economic environments and growth opportunities. However, the heavy emphasis on North America may limit benefits from other regions' growth. Consider increasing exposure to underrepresented regions like Latin America or Africa to enhance diversification and tap into potential growth markets, balancing geographic risks and opportunities.

Dividends Info

  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Weighted yield (per year) 1.90%

With a dividend yield of 1.9%, the portfolio provides a modest income stream. Dividends can be an important component of total returns, especially in a low-interest-rate environment. While the yield is not particularly high, it contributes to overall performance and can be reinvested to compound growth. Consider whether the current dividend yield aligns with your income needs and explore other income-generating assets if a higher yield is desired.

Ongoing product costs Info

  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.07%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.07%. This is advantageous for long-term performance, as lower costs mean more of your money remains invested and working for you. Keeping costs low is a key factor in maximizing returns over time. Regularly review the cost structure and consider whether any changes could further reduce expenses without sacrificing diversification or performance.

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