Balanced ETF portfolio with strong US focus and moderate international exposure

Report created on Feb 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three key ETFs: the Vanguard S&P 500 ETF, Invesco NASDAQ 100 ETF, and Vanguard Total International Stock Index Fund ETF Shares. With a 60% allocation to the S&P 500 ETF and 25% to the NASDAQ 100 ETF, it leans heavily towards large-cap US equities. The remaining 15% in international stocks adds a touch of global diversification. Compared to a typical balanced benchmark, this portfolio has a heavier US tilt, which may offer stability but could limit exposure to non-US growth opportunities. Consider whether this balance aligns with your global market outlook.

Growth Info

Historically, this portfolio has delivered an impressive CAGR of 14.63%, reflecting strong past performance. However, the max drawdown of -27.37% highlights potential volatility during market downturns. For context, a typical balanced portfolio might have a lower drawdown. While past performance indicates robust growth, it's essential to remember that historical data doesn't guarantee future results. Evaluating if this risk-reward ratio aligns with your tolerance can guide future adjustments.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, shows promising results for this portfolio. With a 50th percentile return of 442.5% and a 67th percentile of 658.2%, the projections are optimistic. However, keep in mind that these are statistical estimates and not guarantees. The 5th percentile at 70.2% indicates some downside risk. Regularly revisiting these projections can help manage expectations and adjust strategies as needed.

Asset classes Info

  • Stocks
    100%

This portfolio is 100% invested in stocks, which is typical for growth-focused strategies but may lack the risk mitigation offered by bonds or other asset classes. Compared to a diversified benchmark, which often includes bonds, the lack of fixed-income assets could lead to higher volatility. If seeking more stability, consider introducing other asset classes to balance risk and potential returns.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    12%
  • Financials
    11%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology at 35%, followed by consumer cyclicals and financial services. This tech-heavy focus aligns with recent market trends but may lead to increased volatility, especially during interest rate hikes. Compared to a typical diversified benchmark, this sector composition is more concentrated. Assess whether this aligns with your risk tolerance or if a more balanced sector approach might be beneficial.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic allocation heavily favors North America at 85%, with limited exposure to Europe, Asia, and other regions. This US-centric focus could benefit from the stability of the US market but may miss out on growth opportunities in emerging markets. Compared to global benchmarks, this allocation is less diversified geographically. Consider whether increasing international exposure aligns with your diversification goals.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    34%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 48% in mega caps and 34% in big caps. This large-cap focus typically offers stability and lower volatility compared to small caps. However, it may also limit growth potential found in smaller companies. If seeking a balance between stability and growth, consider diversifying across various market capitalizations.

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.

Utilizing the Efficient Frontier, this portfolio could potentially be optimized for a better risk-return ratio. Currently, the allocation is heavily weighted towards US equities, which might not be the most efficient balance. Adjusting allocations among the existing ETFs could potentially improve risk-adjusted returns. Consider exploring these optimization opportunities to ensure alignment with your investment goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.35%

The portfolio's dividend yield stands at 1.35%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.20%. While dividends provide a steady income stream, the overall yield is relatively moderate. For income-focused investors, exploring higher-yielding assets could be worthwhile, though this may shift the risk profile.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, which is a positive aspect for long-term performance. Lower costs mean more of your returns stay in your pocket, compounding over time. This cost efficiency aligns well with best practices in portfolio management. Maintaining this low-cost structure is crucial for maximizing net returns.

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