Balanced portfolio with broad diversification and low costs for moderate risk tolerance
Report created on Dec 20, 2024Risk profile
4/7
Diversification profile
4/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 48.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 40.00% -
VX Vanguard Extended Market Index Fund ETF Shares
VXF - US9229086528 12.00%
This portfolio is composed of three ETFs, with the Vanguard S&P 500 ETF making up 48%, the Vanguard Total International Stock Index Fund ETF Shares at 40%, and the Vanguard Extended Market Index Fund ETF Shares at 12%. This allocation provides exposure to a broad range of U.S. and international equities, aligning well with a balanced investment profile. Such a composition is typical for investors seeking growth while maintaining a degree of diversification. To enhance balance, consider adding other asset classes like bonds or commodities, which can provide stability during market fluctuations.
Growth
Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 10.53%, indicating robust performance over time. The maximum drawdown of -34.72% highlights the potential volatility during market downturns. While these figures are favorable, it's important to remember that historical performance doesn't guarantee future results. Comparing these metrics to benchmarks can provide additional context on how the portfolio stacks up against market averages. Regularly reviewing performance can help ensure alignment with your financial goals.
Projection
Forward projections using Monte Carlo simulations, which analyze numerous potential future scenarios based on historical data, suggest an annualized return of 11.06%. This simulation shows a 5th percentile outcome of 5.93% and a 67th percentile of 399.06%, indicating a wide range of possibilities. While promising, it's crucial to understand that these projections are not predictions but rather a spectrum of potential outcomes. Continually monitoring these projections can help manage expectations and inform adjustments to the portfolio as needed.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is heavily weighted towards stocks, comprising nearly 99% of the total allocation. This concentration suggests a focus on growth but may lack the stability that other asset classes like bonds could provide. Compared to typical balanced portfolios, which often include a mix of stocks and bonds, this portfolio leans heavily towards equities. Introducing other asset classes could enhance diversification and potentially reduce volatility, aligning with a balanced investment strategy.
Sectors
- Technology 23%
- Financials 17%
- Industrials 12%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 7%
- Consumer Staples 6%
- Basic Materials 4%
- Energy 4%
- Real Estate 3%
- Utilities 3%
The sector allocation is diverse, with significant exposure to technology at 23.48%, followed by financial services and industrials. This distribution mirrors common benchmarks, suggesting a well-rounded sectoral approach. However, a tech-heavy allocation could lead to increased volatility, especially during periods of interest rate hikes. Regularly assessing sector weights and considering shifts in market trends can help maintain a balanced risk profile and capitalize on emerging opportunities.
Regions
- North America 63%
- Europe Developed 16%
- Asia Emerging 7%
- Japan 6%
- Asia Developed 4%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is predominantly exposed to North America at 62.72%, with additional allocations in Europe, Asia, and other regions. This distribution aligns with global benchmarks but may indicate a bias towards U.S. markets. Diversifying further into emerging markets or underrepresented regions could enhance global exposure and potentially increase growth opportunities. Balancing geographic exposure can help mitigate risks associated with regional economic downturns.
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 can be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio based on the current assets. This involves adjusting the allocation to achieve a balance that maximizes returns for a given level of risk. While this optimization focuses on risk and return, it's essential to consider other factors like diversification and personal financial goals when making adjustments.
Dividends
- Vanguard S&P 500 ETF 0.90%
- Vanguard Extended Market Index Fund ETF Shares 0.80%
- Vanguard Total International Stock Index Fund ETF Shares 1.60%
- Weighted yield (per year) 1.17%
With a total dividend yield of 1.17%, the portfolio provides a modest income stream. This yield is typical for growth-oriented portfolios and can contribute to overall returns, especially in low-interest-rate environments. For investors seeking higher income, exploring dividend-focused funds or higher-yielding asset classes could be beneficial. Balancing income needs with growth objectives is essential for long-term financial planning.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Vanguard Extended Market Index Fund ETF Shares 0.06%
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.05%
The portfolio's total expense ratio (TER) is impressively low at 0.05%, thanks to the inclusion of Vanguard ETFs known for their cost efficiency. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. This cost structure aligns well with best practices in portfolio management, ensuring more of your investment works towards achieving your financial goals.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
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