Balanced investment strategy with a strong focus on global stock markets and low costs
Report created on Jul 22, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 75.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 25.00%
This portfolio is composed of two major ETFs, with a significant 75% allocation in the Vanguard Total Stock Market Index Fund ETF Shares and a 25% allocation in the Vanguard Total International Stock Index Fund ETF Shares. This structure indicates a strategic balance between U.S. and international equities, aiming to capture global market growth while leveraging the stability and scale of the U.S. market. The portfolio's broad diversification across sectors and geographies, as evidenced by its exposure to a wide range of industries and regions, aligns with best practices for risk management and growth potential in a balanced investment profile.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 12.59%, with a maximum drawdown of -34.70%. This performance suggests resilience and the potential for strong returns over time, despite significant market downturns. The days contributing to 90% of returns highlight the impact of short-term volatility and the importance of long-term holding to capture growth. Comparing these metrics against benchmarks could provide further insight into relative performance, especially in different market conditions.
Projection
Utilizing Monte Carlo simulation, a method that forecasts potential outcomes by varying random variables within historical ranges, this portfolio's future performance has been analyzed across 1,000 scenarios. Key projections include a median (50th percentile) increase of 277.6%, with a 67th percentile outcome showing even higher growth. However, it's crucial to note that while these simulations offer valuable insights, they are based on historical data, which is not a guaranteed predictor of future performance.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's asset allocation is heavily weighted towards stocks (99%), with a minimal cash holding (1%). This allocation is typical for a growth-oriented strategy, aiming to maximize returns through equity investments. However, the almost exclusive focus on stocks increases exposure to market volatility, which may not be suitable for all investors, particularly those with a lower risk tolerance or a shorter investment horizon.
Sectors
- Technology 27%
- Financials 16%
- Industrials 11%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 3%
- Basic Materials 3%
- Real Estate 3%
- Utilities 3%
Sectoral allocation reveals a strong emphasis on technology (27%) and financial services (16%), followed by industrials and consumer cyclicals. This concentration in tech and finance sectors could lead to higher volatility, given these sectors' sensitivity to economic cycles and interest rate changes. Diversifying across additional sectors or reducing concentration in the most volatile sectors could mitigate risk without significantly compromising growth potential.
Regions
- North America 77%
- Europe Developed 10%
- Asia Emerging 4%
- Japan 4%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is predominantly invested in North America (77%), with diversified exposure across developed and emerging markets worldwide. This geographic distribution supports risk management by tapping into different economic cycles and growth opportunities. However, the heavy emphasis on North America, while reducing exposure to geopolitical risks in less stable regions, may limit potential gains from faster-growing emerging markets.
Market capitalization
- Mega-cap 42%
- Large-cap 31%
- Mid-cap 19%
- Small-cap 6%
- Micro-cap 2%
The portfolio's market capitalization breakdown shows a bias towards mega (42%) and big (31%) cap stocks, suggesting a preference for large, established companies known for their stability and potential for steady growth. While this can reduce volatility compared to portfolios with higher allocations to smaller companies, it may also limit exposure to high-growth opportunities in the small and micro-cap segments.
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.
Considering the Efficient Frontier, an optimization analysis could explore whether the current allocation between the two ETFs offers the best possible risk-return ratio. Adjusting the balance might enhance returns for the same level of risk, or reduce volatility without significantly impacting potential growth. It's a sophisticated approach that requires careful analysis but can lead to a more optimized portfolio.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.60%
The portfolio's dividend yield, averaging 1.60%, contributes to its total return, providing a steady income stream in addition to potential capital appreciation. This yield is a balance between the higher dividends from international stocks and the lower yields from U.S. stocks, reflecting a strategic approach to income generation within a growth-focused portfolio.
Ongoing product costs
- 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%
With a total expense ratio (TER) of 0.04%, the portfolio benefits from exceptionally low costs, maximizing the potential for net returns. This efficiency is a significant advantage, as lower costs directly correlate with better long-term performance by reducing the drag on investment growth.
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