A balanced portfolio with high diversification and global equity focus

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a moderate risk tolerance, seeking growth with some income potential. The heavy equity allocation suggests a focus on capital appreciation, making it ideal for those with a long-term horizon. The balanced nature and low costs align with goals of wealth accumulation while maintaining diversification. Investors comfortable with market fluctuations and seeking to leverage global equities for growth would find this portfolio appealing.

Positions

  • Vanguard Total World Stock Index Fund ETF Shares
    VT - US9220427424
    62.56%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    26.78%
  • Vanguard High Dividend Yield Index Fund ETF Shares
    VYM - US9219464065
    7.07%
  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares
    VCIT - US92206C8709
    3.59%

The portfolio is predominantly composed of equity ETFs, with over 95% allocated to stocks. This composition aligns with a balanced risk profile, offering potential for growth while maintaining some stability through bonds. In comparison to a typical balanced benchmark, which often includes around 60% equities, this portfolio leans more towards stocks. This indicates a higher risk tolerance and growth potential. To enhance stability, consider increasing bond allocation slightly, aligning closer with traditional balanced benchmarks, especially if market volatility is a concern.

Growth Info

The historical performance shows a strong CAGR of 12.12%, indicating robust growth over time. This performance surpasses typical balanced benchmarks, which often see lower growth rates. However, the max drawdown of -32.75% suggests vulnerability during market downturns. Balancing growth with risk management is crucial. Consider diversifying further into less volatile asset classes to mitigate potential losses during downturns, ensuring more consistent performance across varying market conditions.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a positive outlook with an annualized return of 10.89%. However, these projections rely on past data and do not guarantee future results. The wide range of potential outcomes highlights the uncertainty inherent in investing. To prepare for varying scenarios, maintaining a diversified portfolio and regularly reviewing asset allocation can help manage risk and optimize returns over time.

Asset classes Info

  • Stocks
    96%
  • Bonds
    4%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's asset class distribution is heavily skewed towards stocks, with minimal exposure to bonds. This allocation suggests a focus on capital appreciation. While this can drive growth, it also increases exposure to market volatility. A more balanced approach could involve increasing bond exposure, which typically offers stability and income. This could help cushion the portfolio during equity market downturns, providing a smoother ride for investors seeking a balanced risk-return profile.

Sectors Info

  • Technology
    29%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation shows a significant concentration in technology, at nearly 30%. While tech has driven recent market gains, it can also be volatile, especially during interest rate changes. The portfolio's diversification across other sectors is commendable, but consider reducing tech exposure slightly to mitigate risk. Diversifying into sectors like healthcare or utilities, which are often more stable, could provide a buffer against tech sector volatility, ensuring a more balanced sectoral exposure.

Regions Info

  • North America
    75%
  • Europe Developed
    9%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, comprising over 74% of assets. While this reflects the strong performance of U.S. markets, it limits exposure to international growth opportunities. Diversifying geographically can reduce regional risk and tap into growth in emerging markets. Consider increasing allocation to regions like Asia or Europe to enhance diversification and potentially benefit from global economic trends, reducing reliance on North American markets.

Dividends Info

  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 4.40%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.67%

The portfolio's dividend yield stands at 1.67%, with the highest contribution from the High Dividend Yield ETF. Dividends can provide a steady income stream, beneficial for investors seeking cash flow. However, the overall yield is modest, reflecting the growth-focused nature of the portfolio. If income generation is a priority, consider increasing allocation to high-dividend ETFs or bonds, which can enhance yield while maintaining diversification, supporting income-oriented investment goals.

Ongoing product costs Info

  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained, enhancing compounding over time. This cost efficiency aligns well with best practices, supporting better net returns. Continue to monitor costs and seek opportunities to replace any higher-fee holdings with lower-cost alternatives, ensuring the portfolio remains cost-effective and aligned with investment goals.

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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best risk-return trade-off. Currently, the focus on equities suggests a higher risk profile. By adjusting the asset allocation, particularly by increasing bond exposure, the portfolio can achieve a more efficient balance. This involves finding the allocation that offers the highest expected return for a given level of risk, ensuring the portfolio is well-positioned to meet investment goals while managing risk effectively.

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