Balanced Risk with Global Exposure and Broad Diversification in a Single ETF Portfolio

Report created on Dec 3, 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 consists entirely of the Vanguard Total International Stock Index Fund ETF Shares, representing a single ETF position. This ETF provides broad exposure to international stocks, covering various sectors and regions. Such a composition offers simplicity and ease of management. However, relying on a single ETF may limit flexibility and the ability to tailor the portfolio to specific investment goals or risk preferences. Consider the benefits of diversification across multiple funds to enhance control over sector and regional exposures.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 6.55%. This reflects a steady performance over time, although it's important to note the maximum drawdown of -35.99%, indicating vulnerability to market downturns. The concentration in international equities may contribute to volatility, but the overall growth potential remains attractive for long-term investors. To mitigate risks, consider diversifying across additional asset classes or funds to balance potential downturns with more stable investments.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses random sampling to estimate potential outcomes, assuming a hypothetical initial investment. Results indicate a 5th percentile outcome of -24.95% and a 50th percentile of 108.92%, with an annualized return of 6.7%. While the median projection is positive, the range of outcomes highlights the inherent uncertainty in market performance. To enhance future returns, consider strategies that align with your risk tolerance and investment horizon.

Asset classes Info

  • Stocks
    98%
  • Cash
    1%

The portfolio is primarily composed of stocks, with a minor allocation to cash and other assets. This stock-heavy allocation aligns with a growth-oriented strategy, offering potential for capital appreciation. However, the lack of fixed-income or alternative investments may increase exposure to equity market volatility. To achieve a more balanced risk profile, consider incorporating bonds or other asset classes that provide income and stability, reducing the overall portfolio's sensitivity to market fluctuations.

Sectors Info

  • Financials
    21%
  • Industrials
    15%
  • Technology
    13%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Basic Materials
    8%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Energy
    5%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio is well-diversified across sectors, with significant allocations to financial services, industrials, and technology. This sectoral diversity helps mitigate risks associated with downturns in specific industries. However, the concentration in certain sectors like financials and industrials may introduce sector-specific risks. To enhance resilience, consider periodically reviewing and adjusting sector allocations to ensure alignment with economic trends and personal investment goals, maintaining a balanced exposure across various industries.

Regions Info

  • Europe Developed
    39%
  • Asia Emerging
    16%
  • Japan
    16%
  • Asia Developed
    10%
  • North America
    8%
  • Australasia
    5%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Europe Emerging
    1%

The geographic allocation of the portfolio is diverse, with significant exposure to Europe Developed, Asia Emerging, and Japan. This international diversification reduces reliance on any single economy, spreading risk across global markets. However, the relatively low allocation to North America may limit exposure to one of the world's largest and most stable markets. To optimize geographic balance, consider evaluating regional economic conditions and potential growth opportunities, adjusting allocations to align with your investment strategy.

Dividends Info

  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 3.00%

The portfolio offers a dividend yield of 3.0%, providing a steady stream of income. This yield can be an attractive feature for investors seeking regular cash flow in addition to capital appreciation. However, relying solely on dividends from a single ETF may limit income potential. To enhance income generation, consider exploring additional income-producing investments or funds that align with your risk tolerance and financial goals, potentially increasing the overall yield of the portfolio.

Ongoing product costs Info

  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The Vanguard Total International Stock Index Fund ETF Shares has a low expense ratio of 0.08%, making it a cost-effective investment option. This low cost helps maximize net returns by minimizing the drag on performance from fees. Maintaining low investment costs is crucial for long-term growth, especially when compounded over time. To continue benefiting from cost efficiency, consider regularly reviewing the expense ratios of any additional investments, ensuring they align with your cost-conscious investment strategy.

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