A broadly diversified portfolio with balanced risk and low-cost exposure to global equities

Report created on Apr 6, 2025

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 composed of two Vanguard ETFs, with a 70% allocation to the Total Stock Market ETF and 30% to the Total International Stock Index ETF. This structure offers broad exposure to global equities, with a focus on U.S. stocks. Compared to a typical balanced portfolio, this allocation leans more toward equities, which may result in higher potential returns but also increased volatility. Consider whether this equity-heavy composition aligns with your risk tolerance and investment goals, potentially adding fixed income or alternative assets to mitigate risk.

Growth Info

Historically, the portfolio has delivered a CAGR of 9.81%, indicating strong growth over time. However, it experienced a maximum drawdown of -34.64%, reflecting significant volatility during downturns. This performance is in line with equity-heavy portfolios, which tend to outperform in bullish markets but suffer in bearish ones. It's important to contextualize this with personal risk tolerance, ensuring you are comfortable with potential fluctuations. Consider stress-testing your portfolio against historical market downturns to gauge resilience.

Projection Info

The Monte Carlo simulation, which uses historical data to estimate future outcomes, suggests a median projected return of 165.7% over the investment horizon, with a 5th percentile outcome of -6.8%. While these projections offer insight, remember that they are based on past data and do not guarantee future results. The high count of simulations with positive returns (935 out of 1,000) is encouraging, but it's crucial to regularly review and adjust your portfolio to align with changing market conditions and personal circumstances.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly invested in stocks (99%), with a minimal cash position (1%). This allocation maximizes growth potential but may expose you to higher risk compared to a more diversified asset class mix. Diversification across asset classes, such as bonds or real estate, can provide stability and reduce volatility. Consider whether adding other asset classes could better align with your risk tolerance and investment objectives, particularly if you seek to preserve capital during market downturns.

Sectors Info

  • Technology
    25%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation reveals a significant concentration in technology (25%), followed by financial services (17%) and consumer cyclicals (11%). This mirrors common benchmarks but introduces sector-specific risks, such as higher volatility in tech during interest rate changes. While this alignment supports growth, consider diversifying across sectors to mitigate risks associated with economic cycles. Regularly review sector trends and adjust allocations to maintain a balanced risk-return profile.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is heavily skewed toward North America (72%), with notable exposure to Europe Developed (12%) and minimal allocations to emerging markets. This regional bias may limit diversification benefits and expose you to specific geopolitical risks. While U.S. markets have historically performed well, consider increasing exposure to other regions, particularly emerging markets, to enhance diversification and capture growth opportunities outside North America.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio is diversified across market capitalizations, with a substantial focus on mega (42%) and big (31%) companies. This allocation provides stability and growth potential, as larger companies tend to be more resilient. However, the limited exposure to small (6%) and micro (2%) caps may reduce opportunities for higher returns associated with smaller, potentially high-growth companies. Consider whether increasing allocation to smaller market caps aligns with your risk appetite and growth objectives.

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's current composition may be optimized on the Efficient Frontier, which identifies the best possible risk-return ratio for given assets. By adjusting allocations between the existing ETFs, you might enhance returns or reduce risk without adding new assets. This approach focuses solely on optimizing the current holdings, ensuring you achieve the most efficient performance given your risk tolerance. Regularly reassess and rebalance to maintain this optimal positioning.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.00%

With a total dividend yield of 2.00%, this portfolio offers a moderate income stream, primarily from the international ETF's higher yield (3.40%). Dividends can provide stability and supplement returns, making them valuable for income-focused investors. If income generation is a priority, consider increasing exposure to high-dividend-paying assets. However, balance this with growth objectives, as high-dividend stocks may offer lower capital appreciation potential.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, reflecting cost-effective ETF choices. Low costs are crucial for long-term performance, as they minimize the drag on returns. This efficient cost structure aligns well with best practices for optimizing net returns. Continue to monitor expense ratios and consider cost-effective options when making any portfolio adjustments to maintain this advantage.

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