A balanced and broadly diversified portfolio with a strong focus on US equities

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 balanced risk tolerance and a long-term investment horizon. It is geared towards those seeking growth through a strong focus on equities, particularly in the US market. The portfolio's broad diversification across sectors and low costs align with investors looking for steady capital appreciation while accepting moderate volatility. Ideal for individuals aiming to build wealth over time, it provides a solid foundation with room for further diversification.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    75.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    15.00%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    10.00%

This portfolio is heavily weighted towards US equities, with 75% in the Vanguard Total Stock Market Index Fund ETF. The remaining allocation includes 15% in the Vanguard Total International Stock Index Fund ETF and 10% in the Vanguard Growth Index Fund ETF. This composition leans more towards growth, with a significant portion in domestic markets. Such a focus can offer robust returns in a thriving US market but may lack diversification benefits. Consider balancing the portfolio further by adding more international exposure or diversifying into other asset classes to mitigate domestic market risks.

Growth Info

Historically, the portfolio has shown strong performance with a CAGR of 12.82%, indicating solid growth over time. However, it also experienced a maximum drawdown of -34.42%, highlighting potential volatility during market downturns. This performance aligns with the broader equity market trends, suggesting that while the portfolio can deliver high returns, it also carries significant risk. Investors should be aware that past performance does not guarantee future results and should consider their risk tolerance when evaluating these figures.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a median return of 356.92%. This analysis uses historical data to simulate future performance, offering insights into possible scenarios. However, it's important to remember that these projections are based on past market conditions and cannot predict future events. The high number of simulations with positive returns (984 out of 1,000) suggests a favorable outlook, but investors should remain cautious and prepared for variability in outcomes.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio's asset allocation is overwhelmingly concentrated in stocks, accounting for 99.52% of the total. While this can drive growth, it also increases exposure to market volatility. Having a more balanced mix of asset classes, such as bonds or real estate, could enhance diversification and reduce risk. A broader allocation would align more closely with a balanced portfolio strategy, providing stability during market fluctuations.

Sectors

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

The sector allocation is tech-heavy, with technology comprising nearly 30% of the portfolio. Other significant sectors include financial services and consumer cyclicals. This concentration in technology can lead to higher volatility, especially during periods of regulatory changes or interest rate fluctuations. A more diversified sector approach could help mitigate risks associated with sector-specific downturns and enhance overall portfolio stability.

Regions

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily skewed towards North America, with 85.84% exposure. This limits the benefits of international diversification, which can help hedge against regional economic downturns. Expanding exposure to other regions, such as emerging markets, could provide growth opportunities and reduce reliance on the US market. A more balanced geographic allocation would better align with global diversification standards.

Redundant positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio holds highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund ETF and the Vanguard Growth Index Fund ETF. High correlation means these assets tend to move in tandem, reducing diversification benefits. To enhance risk management, consider reallocating to less correlated assets, which can provide a buffer during market downturns and improve overall portfolio resilience.

Dividends

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.30%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.17%

The portfolio's dividend yield is relatively modest at 1.17%, with the highest contribution from the Vanguard Total International Stock Index Fund ETF at 1.6%. While dividends can provide a steady income stream, the focus here is more on growth. Investors seeking income might consider increasing exposure to higher-yielding assets. However, this should be balanced with growth objectives to maintain the portfolio's overall strategy.

Ongoing product costs

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of just 0.04%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Keeping costs low is a critical component of successful investing, and this portfolio is well-aligned in that regard. Investors should continue to monitor fees and consider low-cost alternatives when making changes to the portfolio.

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 be optimized using the Efficient Frontier by adjusting the existing asset weights to achieve a better risk-return balance. This approach focuses on maximizing returns for a given level of risk. However, optimization should be based solely on current assets, and investors should be mindful of their individual risk tolerance and investment goals. The goal is to find the best possible risk-return ratio without compromising other objectives, such as diversification.

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