A well-diversified balanced portfolio with a strong focus on U.S. and international equities

Report created on Mar 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of equities and bonds, with a significant emphasis on U.S. stocks through the Vanguard Total Stock Market Index Fund ETF Shares, which accounts for 37% of the portfolio. This is complemented by international equities and bonds, making it a balanced portfolio. The allocation aligns well with a balanced investment strategy, providing exposure to both growth and income-generating assets. To enhance diversification, consider introducing additional asset classes or increasing the bond allocation to reduce volatility further.

Growth Info

Historically, the portfolio has shown a strong performance with a CAGR of 10.56%. This indicates a solid growth trajectory over time, outperforming many traditional benchmarks. However, it's important to note the max drawdown of -29.72%, which highlights potential volatility during market downturns. While past performance is not a guarantee of future results, maintaining a diversified approach can help mitigate risks. Regularly reviewing and rebalancing the portfolio can ensure alignment with long-term investment goals.

Projection Info

Using Monte Carlo simulations, the portfolio shows a promising forward projection with an annualized return of 11.07%. This method uses historical data to simulate a range of potential outcomes, providing insight into future performance. While the median projected growth is strong, the 5th percentile indicates potential for negative returns. It's crucial to remember that simulations are based on historical data and assumptions, which may not fully capture future market conditions. Regularly reviewing the portfolio's risk profile and adjusting allocations can help navigate potential uncertainties.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%

The portfolio's allocation across asset classes includes 79% in stocks and 20% in bonds, with a small cash position. This heavy stock allocation supports growth potential but may increase volatility. Compared to typical balanced portfolios, which often have a higher bond allocation, this portfolio leans towards growth. To enhance stability, consider increasing bond exposure or diversifying into alternative assets. This approach can help balance risk and return, especially during market downturns.

Sectors Info

  • Technology
    17%
  • Financials
    15%
  • Industrials
    10%
  • Consumer Discretionary
    10%
  • Health Care
    7%
  • Telecommunications
    5%
  • Energy
    4%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is diverse, with technology (17%) and financial services (15%) leading the way. This composition aligns with common benchmarks, ensuring broad exposure across various industries. However, a tech-heavy portfolio might experience heightened volatility during interest rate hikes. To mitigate sector-specific risks, consider diversifying further into underrepresented sectors such as utilities or real estate. This can provide additional stability and reduce dependency on a few high-performing sectors.

Regions Info

  • North America
    49%
  • Europe Developed
    13%
  • Japan
    6%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic allocation shows a strong focus on North America (49%), with significant exposure to Europe and Asia. Compared to global benchmarks, this portfolio slightly overweights North America. While this has been beneficial historically, diversifying further into emerging markets could provide additional growth opportunities. Emerging markets often offer higher growth potential, albeit with increased risk. Balancing geographic exposure can help manage regional risks and capture diverse economic growth.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    20%
  • Mid-cap
    15%
  • Small-cap
    11%
  • Micro-cap
    6%

The portfolio's market capitalization breakdown includes a healthy mix of mega (27%), big (20%), medium (15%), small (11%), and micro (6%) caps. This distribution supports diversification and offers exposure to various company sizes. Compared to common benchmarks, this allocation provides a balanced approach to capturing growth from both large, established companies and smaller, potentially high-growth firms. Maintaining this balance can help optimize risk-adjusted returns over the long term.

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 identifies the best possible risk-return ratio based on current assets. This optimization focuses on achieving the highest expected return for a given level of risk. While the portfolio is already well-diversified, exploring reallocation among existing assets could further enhance efficiency. Regularly reviewing the portfolio's position on the Efficient Frontier can help maintain optimal performance and align with evolving financial objectives.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.20%
  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 2.48%

The portfolio's overall dividend yield is 2.48%, with contributions from both equity and bond holdings. This yield provides a steady income stream, which can be particularly appealing during periods of market volatility or low growth. Dividend-paying stocks and bonds can offer stability and enhance returns over time. To increase income potential, consider focusing on higher-yielding assets or dividend growth strategies. This approach can supplement capital appreciation and support long-term financial goals.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

Portfolio costs are impressively low, with a Total Expense Ratio (TER) of 0.08%. This cost efficiency supports better long-term performance by minimizing the impact of fees on returns. Low costs are a key advantage, allowing more of the portfolio's growth to contribute directly to wealth accumulation. Continuously monitoring and managing fees can ensure cost-effectiveness, helping to maximize net returns over time.

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