A balanced portfolio with global exposure and moderate risk for long-term growth

Report created on Mar 22, 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 three primary components: 80% in the Vanguard Total World Stock Index Fund ETF, 10% in the Vanguard Intermediate-Term Treasury Index Fund ETF, and 10% in the Vanguard Federal Money Market Fund. This structure emphasizes global equity exposure while maintaining a buffer of fixed income and cash. Compared to a typical balanced benchmark, this portfolio leans heavily on equities, which can drive growth but may also increase volatility. Balancing these assets can help achieve a desired risk-return profile, ensuring stability during market fluctuations.

Growth Info

Historically, the portfolio has shown a CAGR of 8.29%, which is a solid performance for a balanced portfolio. However, it has experienced a maximum drawdown of -28.53%, indicating significant volatility during downturns. When compared to a benchmark, this performance suggests strong growth potential but also highlights the importance of managing downside risk. To mitigate future drawdowns, consider diversifying further or incorporating additional risk management strategies, such as adjusting asset weightings during volatile periods.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes. With 1,000 simulations, the median outcome suggests a 71.8% end portfolio value increase, while the 5th percentile shows a potential loss of 10.1%. These projections use historical data to model future possibilities, but it's crucial to remember that past performance does not guarantee future results. To prepare for uncertainty, consider maintaining a diversified asset mix and regularly reviewing your investment strategy to align with changing market conditions.

Asset classes Info

  • Stocks
    79%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset allocation is predominantly in stocks (79%), with bonds (10%) and cash (1%) providing balance. This allocation is typical for investors seeking growth with a moderate risk tolerance. Compared to benchmark norms, the portfolio's equity weight is relatively high, which could lead to increased returns but also higher volatility. To enhance diversification, consider increasing exposure to bonds or alternative asset classes to reduce risk and provide a buffer during market downturns.

Sectors Info

  • Technology
    20%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is well diversified, with significant exposure to technology (20%), financial services (13%), and consumer cyclicals (9%). This distribution aligns closely with global benchmarks, providing a balanced approach to sector risk. However, the high concentration in technology may lead to increased volatility, especially during periods of interest rate changes or tech sector downturns. Regularly reviewing sector allocations and adjusting as needed can help manage sector-specific risks and exploit emerging opportunities.

Regions Info

  • North America
    54%
  • Europe Developed
    11%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is heavily weighted towards North America (54%), with notable exposure to Europe Developed (11%), and smaller allocations to other regions. This distribution provides a broad global reach but may expose the portfolio to regional risks, such as economic downturns in North America. To enhance geographic diversification, consider increasing exposure to underrepresented regions, such as emerging markets, which can offer growth potential and reduce reliance on any single geographic area.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    25%
  • Mid-cap
    15%
  • Small-cap
    4%
  • Micro-cap
    1%

Market capitalization exposure is skewed towards mega (34%) and big (25%) companies, with limited allocation to small (4%) and micro (1%) caps. This focus on larger companies typically provides stability and lower volatility, but it may limit the portfolio's growth potential from smaller, high-growth firms. To capture opportunities across the market cap spectrum, consider increasing allocation to small and medium-sized companies, which can enhance diversification and potentially boost returns.

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 may benefit from optimization using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting the current asset allocation, you can potentially enhance returns without taking on additional risk. This process involves rebalancing the portfolio to achieve a more efficient allocation, ensuring that you are not sacrificing potential returns for unnecessary risk. Regular optimization can help maintain the portfolio's alignment with your risk tolerance and investment objectives.

Dividends Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.70%
  • Vanguard Federal Money Market Fund Investor Shares 4.90%
  • Vanguard Total World Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 2.14%

The portfolio's overall dividend yield stands at 2.14%, with the Vanguard Federal Money Market Fund offering the highest yield at 4.90%. Dividends contribute to total returns, providing a steady income stream that can be reinvested for growth. For investors seeking income, maintaining a balance between high-yield and growth-oriented assets is essential. To enhance income, consider increasing exposure to dividend-paying stocks or funds, while ensuring alignment with overall investment goals and risk tolerance.

Ongoing product costs Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.06%

With a total expense ratio (TER) of 0.06%, the portfolio is cost-effective, which supports better long-term performance. Low costs mean more of your investment returns are retained, enhancing compounding benefits over time. Compared to industry averages, this TER is impressively low, contributing to the portfolio's efficiency. Regularly reviewing and minimizing investment costs can further improve net returns, ensuring that you maximize the value of your investments over the long term.

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