Blended US and Asia equity portfolio with efficient risk balance and moderate global diversification
Report created on May 4, 2024Risk profile
4/7
Diversification profile
3/5
Positions
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IV iShares Core S&P 500 ETF
IVV - US4642872000 66.60% -
AA iShares MSCI All Country Asia ex Japan ETF
AAXJ - US4642881829 33.40%
The structure is simple and focused: two broad equity ETFs, with roughly two‑thirds in a US large‑cap fund and one‑third in a diversified Asia ex‑Japan fund. Everything is in stocks, so there is no built‑in cushion from bonds or cash. This kind of straightforward setup is easy to monitor and understand, which many investors like. The key implication is that all risk and return comes from global equities, split between the US and a wide Asian region. For someone comfortable with market ups and downs, this concentrated structure can be effective, but it relies heavily on staying invested through volatility.
Growth
From 2016 to 2026, a hypothetical $1,000 grew to about $3,136, a compound annual growth rate (CAGR) of 12.13%. CAGR is like an average yearly “speed” of growth over the full period. That slightly lagged the US market but beat the broader global market, showing that adding Asia helped versus worldwide diversification but trailed a pure US tilt. The maximum drawdown, about -31.8%, is in line with major equity corrections and a bit milder than both benchmarks. This mix has delivered solid long‑term growth with equity‑like swings; future returns may differ, so this history should be a guide, not a promise.
Asset classes
- Stocks 100%
All assets sit in one bucket: stocks. There is no allocation to bonds, cash, or alternatives. That means full participation in equity upside but also full exposure to equity drawdowns, without a stabilizer that might cushion big market drops. For a “balanced” risk classification, this is an equity‑heavy approach, but the internal diversification across different companies and regions still helps. Comparing to more traditional balanced setups, which often include a sizable bond slice, this portfolio is more growth‑oriented. Anyone using it as a core holding might consider whether separate bond or cash reserves elsewhere handle short‑term needs and volatility tolerance.
Sectors
- Technology 35%
- Financials 14%
- Consumer Discretionary 10%
- Telecommunications 10%
- Industrials 8%
- Health Care 7%
- Consumer Staples 4%
- Energy 4%
- Basic Materials 2%
- Utilities 2%
- Real Estate 2%
Sector exposure is clearly tilted toward technology at about 35%, followed by financials and consumer‑related areas, with smaller slices in health care, industrials, energy, and others. This is reasonably similar to many broad equity benchmarks, which have become tech‑heavy as large tech and semiconductor names grew. A tech‑leaning mix can boost long‑term returns when innovation and digital trends are rewarded, but it can also create sharper drawdowns when interest rates rise or growth expectations cool. Overall, the sector composition is well‑balanced and aligns closely with global standards, offering exposure across the economic cycle rather than a narrow theme.
Regions
- North America 66%
- Asia Developed 18%
- Asia Emerging 15%
Geographically, around two‑thirds sits in North America and one‑third across developed and emerging Asia, excluding Japan. Relative to typical global benchmarks, this means a solid, but not extreme, tilt toward the US and an intentional overweight to Asia versus Europe or other regions. This design puts more emphasis on US corporate strength and Asian growth potential, particularly in emerging markets like China, India, and Southeast Asia. The trade‑off is less exposure to Europe and other areas, which slightly reduces global breadth. Still, the mix gives meaningful regional diversification beyond a US‑only approach, which is a healthy step toward risk spreading.
Market capitalization
- Mega-cap 54%
- Large-cap 33%
- Mid-cap 12%
- Small-cap 1%
The portfolio is dominated by mega‑ and large‑cap companies, with over 85% in that space and only a small allocation to mid‑ and small‑caps. Large firms tend to be more established, with deeper liquidity and more analyst coverage, which can mean somewhat lower risk than concentrating in small, speculative names. At the same time, the modest slice in mid‑ and small‑caps still adds some growth kick and diversification, since these companies can behave differently over the cycle. Relative to a pure mega‑cap portfolio, this mix stays firmly blue‑chip while quietly capturing a bit of the smaller‑company premium over time.
True holdings
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NV NVIDIA Corporation 5.04%
Part of fund(s):- iShares Core S&P 500 ETF
-
23 Taiwan Semiconductor Manufacturing Co. Ltd. 5.00%
Part of fund(s):- iShares MSCI All Country Asia ex Japan ETF
-
AA Apple Inc 4.37%
Part of fund(s):- iShares Core S&P 500 ETF
-
MS Microsoft Corporation 3.28%
Part of fund(s):- iShares Core S&P 500 ETF
-
AM Amazon.com Inc 2.40%
Part of fund(s):- iShares Core S&P 500 ETF
-
GO Alphabet Inc Class A 2.00%
Part of fund(s):- iShares Core S&P 500 ETF
-
AV Broadcom Inc 1.79%
Part of fund(s):- iShares Core S&P 500 ETF
-
GO Alphabet Inc Class C 1.60%
Part of fund(s):- iShares Core S&P 500 ETF
-
ME Meta Platforms Inc. 1.54%
Part of fund(s):- iShares Core S&P 500 ETF
-
07 Tencent Holdings Ltd 1.51%
Part of fund(s):- iShares MSCI All Country Asia ex Japan ETF
- Top 10 total 28.52%
Looking through the ETFs’ top holdings, the largest underlying names are familiar global giants such as NVIDIA, TSMC, Apple, Microsoft, Amazon, Alphabet, Meta, and Tencent. Several of these appear via the US fund, and some through the Asia fund, creating hidden overlap even if only top‑10 data is captured. That means individual companies, especially big tech and semiconductor names, have a meaningful combined footprint. Overlap isn’t necessarily bad, but it does slightly reduce diversification because more performance depends on a relatively small set of global leaders. Being aware of this dynamic helps frame expectations if those mega‑caps go through a rough patch.
Factors
Factor exposure is almost perfectly balanced across value, size, momentum, quality, low volatility, and yield, all sitting near neutral. Factors are like underlying “personality traits” of stocks that explain behavior—such as cheapness, stability, or recent trend strength. A neutral profile means the portfolio behaves much like the broad global market rather than making a big bet on any one style, such as deep value or high dividend. This is a strength for investors who don’t want to time styles or worry about one factor underperforming for long stretches. It supports smoother style behavior, driven more by regions and sectors than factor tilts.
Risk contribution
-
iShares Core S&P 500 ETF
Weight: 66.60% 66.4% -
iShares MSCI All Country Asia ex Japan ETF
Weight: 33.40% 33.6%
Risk contribution shows how much each holding drives overall volatility, not just how big it is. In this case, the US ETF contributes about two‑thirds of the risk, and the Asia ETF about one‑third—almost identical to their weights. That’s a sign of a very balanced setup: no single position is punching far above its size in terms of risk. The risk/weight ratios being essentially 1.0 confirm that both funds have similar volatility characteristics. For a two‑fund portfolio, this is as clean as it gets: if the allocation ever drifts significantly, simple rebalancing can easily realign risk with intended weights.
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.
On the risk‑return chart, the current mix sits essentially on the efficient frontier, meaning that for its level of volatility, the expected return is about as good as you can get with these two ETFs. The Sharpe ratio, which measures return per unit of risk, is 0.62 for the current allocation versus 0.76 at the optimal point and 0.69 at minimum variance. Since all three are very close and the portfolio lies near the frontier, the existing weights are already efficient. Any changes would be more about preference for slightly more or less risk rather than fixing an obvious inefficiency.
Dividends
- iShares MSCI All Country Asia ex Japan ETF 1.80%
- iShares Core S&P 500 ETF 1.30%
- Weighted yield (per year) 1.47%
The overall dividend yield sits around 1.47%, combining a slightly higher yield from the Asia ETF with a modest yield from the US ETF. Dividend yield is the annual cash payout as a percentage of price, like interest on a savings account but not guaranteed. This level is typical for a growth‑oriented global equity mix, where many companies reinvest profits rather than paying large dividends. For income‑focused investors, this would be considered a low‑to‑moderate cash flow stream. For growth‑focused investors, it’s a nice bonus on top of potential capital gains, but not the main engine of total return.
Ongoing product costs
- iShares MSCI All Country Asia ex Japan ETF 0.70%
- iShares Core S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.25%
The blended total expense ratio (TER) is about 0.25%, driven by a very low‑cost US ETF at 0.03% and a pricier Asia ETF at 0.70%. TER is the annual fee charged by a fund, quietly deducted from returns. Over long periods, costs compound, so keeping them in check is crucial. In this case, the cost structure is quite competitive for a two‑region global equity mix, especially considering the more specialized nature of the Asia fund. The costs are impressively low, supporting better long‑term performance. That means more of the portfolio’s gross return is kept rather than paid away in fees.
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