A balanced portfolio with strong diversification across global stocks and bonds

Report created on Dec 26, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of 90% equities and 10% bonds, with a focus on two Vanguard ETFs for stocks and one for bonds. This composition aligns well with a balanced portfolio, offering growth potential while maintaining some stability through bonds. Compared to common benchmarks, this portfolio leans slightly more towards equities, which may increase returns but also risk. Consider adjusting asset weights based on personal risk tolerance or market conditions to maintain balance.

Growth Info

Historically, the portfolio has achieved a CAGR of 9.14%, indicating strong growth over time. However, it also experienced a maximum drawdown of -31.8%, highlighting potential volatility. This performance is comparable to broad market indices, suggesting the portfolio has captured market growth effectively. While past performance is no guarantee of future results, maintaining a diversified asset mix can help mitigate drawdowns. Regularly reviewing performance against personal goals is advisable.

Projection Info

Using a Monte Carlo simulation with 1,000 scenarios, the portfolio shows a median growth of 132.67% over the projection period. This method uses historical data to estimate potential future outcomes, but it cannot predict market changes. The simulation suggests a high likelihood of positive returns, with 938 scenarios ending profitably. While these projections are promising, they highlight the importance of preparing for various market conditions and maintaining a diversified approach.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's 90% equity allocation provides significant growth potential, while the 10% bond allocation adds stability. This asset class distribution is typical for a balanced portfolio, aiming to capture equity market gains while reducing volatility through bonds. Compared to benchmarks, this allocation is slightly more equity-heavy, which could lead to higher returns but also increased risk. Adjusting the bond allocation could provide additional stability if desired.

Sectors Info

  • Technology
    20%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio is well-diversified across sectors, with technology and financial services having the largest allocations. This sector balance aligns with common benchmarks, providing exposure to both growth and value sectors. However, a high concentration in technology could lead to increased volatility, especially during economic shifts. Regularly reviewing sector allocations and considering shifts based on economic trends can help maintain a balanced risk profile.

Regions Info

  • North America
    48%
  • Europe Developed
    17%
  • Asia Emerging
    7%
  • Japan
    7%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    2%
  • Latin America
    1%

The portfolio has a significant North American exposure at 48.4%, with additional allocations across Europe, Asia, and other regions. This geographic distribution supports diversification, reducing reliance on any single economy. Compared to benchmarks, the portfolio may benefit from increased exposure to emerging markets, which can offer higher growth potential. Evaluating geographic allocations periodically ensures alignment with global economic trends and personal investment goals.

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 is positioned near the Efficient Frontier, indicating a favorable risk-return balance. This optimization suggests that the current asset allocation maximizes returns for the given level of risk. However, as market conditions and personal goals evolve, re-evaluating the portfolio's position on the Efficient Frontier can ensure it remains aligned with desired outcomes. Adjustments may be required to maintain optimal efficiency.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.36%

With a total yield of 2.36%, dividends contribute to the portfolio's returns, providing a steady income stream. The bond ETF offers a higher yield, which can help offset equity volatility. Dividends are particularly relevant for investors seeking income, as they provide returns even in stagnant markets. Regularly reviewing dividend yields and adjusting allocations can optimize income generation according to personal financial needs.

Ongoing product costs Info

  • 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) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, minimizing costs and supporting better long-term performance. Low costs are crucial as they directly impact net returns, allowing more of the investment to compound over time. This cost efficiency aligns with best practices in portfolio management. Continuously monitoring and striving to reduce costs can further enhance returns, especially over extended periods.

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