A globally diversified stock-heavy portfolio with a focus on technology and low costs

Report created on Dec 21, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with the Vanguard Total World Stock Index Fund ETF Shares making up over 93% of the allocation. This indicates a strong emphasis on global equity exposure. The remaining portion is split between the Schwab U.S. Broad Market ETF and the Vanguard Russell 2000 Index Fund ETF Shares, each contributing a small percentage. Compared to common benchmarks, this composition is heavily skewed towards equities, offering broad market exposure but limited diversification across asset classes. Consider adding fixed income or alternative assets to balance risk.

Growth Info

Historically, the portfolio has delivered an impressive annualized return of 10.46% from an initial investment of $1,000. However, it experienced a significant maximum drawdown of -34.45%, highlighting the potential volatility. Compared to benchmarks, the returns are strong, but the drawdown indicates a need for risk management. While past performance is promising, it's crucial to remember that it doesn't guarantee future results. Diversifying asset classes could help mitigate future drawdowns without sacrificing returns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a median 10-year return of 303.51% from a $1,000 investment. With 972 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, it's important to note that simulations are based on past trends and cannot predict future market conditions with certainty. To enhance potential returns, consider optimizing asset allocation while keeping in mind that increased returns may come with increased volatility.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of the total allocation, with negligible exposure to cash, bonds, or other asset classes. This concentration in equities suggests a high-risk profile, which could lead to significant volatility. In contrast, a balanced portfolio typically includes a mix of stocks, bonds, and other assets. To enhance diversification and reduce risk, consider incorporating a wider variety of asset classes, such as bonds or real estate.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    11%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation is led by technology at 24.48%, followed by financial services and industrials. This tech-heavy tilt could result in higher volatility, especially during economic downturns or interest rate hikes. Compared to common benchmarks, the sector distribution is fairly balanced, with exposure across 11 sectors. However, to mitigate sector-specific risks, ensure that no single sector dominates the portfolio. Regularly review sector trends and adjust allocations to maintain a balanced approach.

Regions Info

  • North America
    68%
  • Europe Developed
    13%
  • Asia Emerging
    6%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

With 68% exposure to North America, the portfolio is heavily skewed towards this region, although it also includes significant allocations to Europe and Asia. This geographic concentration may limit diversification benefits, especially if North American markets underperform. Compared to global benchmarks, the portfolio's geographic distribution is relatively aligned but could benefit from increased exposure to emerging markets. Consider diversifying geographically to capture growth opportunities across different regions.

Redundant positions Info

  • Schwab U.S. Broad Market ETF
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio includes correlated assets, particularly between the Schwab U.S. Broad Market ETF and the Vanguard Total World Stock Index Fund ETF Shares. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To enhance risk management, consider incorporating assets with low or negative correlation to existing holdings. This strategy could help stabilize returns and reduce overall portfolio volatility.

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.

Current risk-return optimization indicates that the portfolio is efficient but not optimal, with a potential return of 10.46% and volatility of 17.27%. The Sharpe ratio, a measure of risk-adjusted return, is suboptimal. The Efficient Frontier suggests a potential return increase to 13.45% with slightly higher volatility. To optimize, consider reallocating within existing assets to improve the risk-return ratio while ensuring alignment with your investment goals and risk tolerance.

Dividends Info

  • Schwab U.S. Broad Market ETF 0.90%
  • Vanguard Total World Stock Index Fund ETF Shares 1.20%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.80%
  • Weighted yield (per year) 1.18%

The portfolio's dividend yield stands at 1.18%, with contributions from all three ETFs. While not a primary focus, dividends provide a steady income stream that can enhance total returns, especially in volatile markets. For investors seeking income, this yield is modest compared to income-focused strategies. Consider whether increasing dividend exposure aligns with your goals or if reinvestment strategies are more suitable for long-term growth.

Ongoing product costs Info

  • Schwab U.S. Broad Market ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.07%

The portfolio's costs are impressively low, with an average Total Expense Ratio (TER) of 0.07%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Compared to industry standards, these fees are very competitive, ensuring more of your investment is working for you. Regularly review the cost structure to ensure it remains competitive, and consider lower-cost alternatives if available, to further enhance net returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

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