A balanced portfolio with a strong US focus and low costs offering stable growth potential

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 seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to global equities, making it ideal for individuals looking to build wealth over time. The focus on low costs and diversification across sectors and geographies supports a disciplined investment approach. This investor values stability but is willing to accept some volatility in pursuit of higher returns. Regular portfolio reviews and adjustments can help manage risks and capitalize on evolving market opportunities.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    70.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    25.00%
  • Vanguard Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    5.00%

The portfolio is heavily weighted towards equities, with 70% in US stocks and 25% in international stocks, complemented by a 5% allocation in bonds. This composition aligns with a balanced investment strategy, offering a blend of growth and stability. Compared to common benchmarks, the portfolio is heavily tilted towards equities, which may increase potential returns but also introduces higher volatility. To achieve a more balanced risk profile, consider increasing the bond allocation, which could help cushion against market fluctuations and provide steadier returns over time.

Growth Info

Historically, the portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 11.3%. This performance is impressive and indicates strong growth potential. However, it's important to note the maximum drawdown of -33.51%, which highlights the potential for significant losses during market downturns. Compared to typical benchmarks, this drawdown is within a reasonable range for an equity-heavy portfolio. To mitigate future risks, consider diversifying further into less volatile asset classes, such as bonds, to provide a buffer during market corrections.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a median return of 136.81% over the investment horizon. This indicates a favorable growth outlook, with a 67th percentile projection of 200.94%, suggesting potential upside. However, the 5th percentile shows a potential decline of -2.15%, underscoring the inherent uncertainties in projections. While simulations offer valuable insights, they rely on historical data and do not guarantee future results. Regularly reviewing and adjusting the portfolio can help manage risks and capitalize on changing market conditions.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is primarily composed of stocks, making up over 94% of the allocation, with a minimal 5% in bonds. This heavy stock allocation can drive growth but also increases volatility. Compared to benchmarks, the bond allocation is relatively low, which may not provide sufficient diversification to cushion against market downturns. Increasing the bond allocation could enhance the portfolio's stability, offering a more balanced risk-return profile. Additionally, consider exploring other asset classes like real estate or commodities to further diversify and reduce overall portfolio risk.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

The sectoral allocation is diversified across key industries, with a notable 25.69% in technology and significant weights in financial services and consumer cyclicals. This composition aligns well with common benchmarks, indicating a balanced sectoral approach. However, the heavy tech weighting could introduce higher volatility, particularly in environments with rising interest rates. Consider periodically reviewing sector allocations to ensure they align with market trends and your risk tolerance. Balancing exposure across sectors can help mitigate sector-specific risks and enhance overall portfolio resilience.

Regions Info

  • North America
    72%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with 71.74% exposure, followed by smaller allocations in Europe and Asia. This concentration in North America aligns with common benchmarks but may limit diversification benefits. Overexposure to a single region can increase vulnerability to regional economic and political events. Consider increasing exposure to underrepresented regions like emerging markets, which can enhance diversification and potentially capture higher growth opportunities. A more globally diversified portfolio can provide better risk-adjusted returns over the long term.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.94%

The portfolio's dividend yield stands at 1.94%, with contributions from both stock and bond ETFs. Dividends can provide a steady income stream, especially in volatile markets. The bond component offers a higher yield of 3.7%, which can enhance income stability. Compared to typical income-focused portfolios, the yield is moderate, reflecting the portfolio's growth orientation. To increase income potential, consider adding higher-yielding assets or dividend-focused funds. Balancing growth and income can help achieve a more comprehensive investment strategy that meets both short- and long-term financial goals.

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) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, highlighting cost efficiency. Low costs are crucial for long-term performance, as they minimize the drag on returns. Compared to industry averages, this TER is highly competitive, ensuring more of your investment returns are retained. Maintaining low costs should remain a priority, as it directly contributes to better net returns. Regularly reviewing the portfolio for cost-effective alternatives can further enhance performance. Consider replacing higher-cost funds with similar low-cost options to maximize investment efficiency.

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 potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the current asset allocations, you might achieve a more efficient portfolio that maximizes expected returns for a given level of risk. This optimization focuses on reallocating existing assets rather than introducing new ones. While this approach can enhance performance, it's important to balance it with your risk tolerance and investment goals. Regularly revisiting this analysis can help ensure the portfolio remains aligned with market conditions and personal objectives.

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