A balanced portfolio with a strong focus on U.S. equities and low costs

Report created on Mar 7, 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 predominantly of U.S. equities, with the Vanguard Total Stock Market Index Fund making up over half of the total allocation. International exposure is provided through developed and emerging markets funds, while a modest allocation to real estate and bonds rounds out the portfolio. This structure is well-aligned with a balanced investment strategy, offering a mix of growth potential and income generation. The allocation reflects a focus on equity markets, which may appeal to those seeking growth but also introduces volatility. Consider increasing the bond allocation for more stability if needed.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 10.03%, indicating strong growth over time. However, it experienced a significant maximum drawdown of -33.31%, highlighting its vulnerability during market downturns. The performance is comparable to broad market indices, suggesting its alignment with general market trends. While past performance is not a guarantee of future results, these figures provide a useful benchmark. To potentially reduce volatility, consider diversifying further into asset classes that typically perform differently during downturns.

Projection Info

Monte Carlo simulations, which use historical data to model potential future outcomes, indicate a wide range of potential results for this portfolio. The median projection shows a 116.4% return, but outcomes vary significantly, with a 5th percentile return of -18.4%. This variability underscores the uncertainty inherent in investing. While the simulations predict positive returns in 891 out of 1,000 scenarios, they also highlight the potential for losses. To mitigate this risk, consider adjusting the asset mix to balance growth and stability better.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio is heavily weighted towards stocks (94%), with minimal exposure to bonds (5%) and cash (1%). This allocation supports growth but may increase risk, particularly during market downturns. Compared to typical balanced portfolios, which often include a higher bond allocation, this portfolio leans towards equities. To enhance diversification and reduce volatility, consider increasing the bond allocation. This adjustment can help cushion against market fluctuations and provide more consistent returns.

Sectors Info

  • Technology
    21%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    9%
  • Real Estate
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    4%
  • Utilities
    2%

Sector allocation is well-diversified, with technology (21%) and financial services (16%) being the largest components. This distribution aligns closely with major market indices, offering broad exposure across industries. However, the concentration in technology may lead to higher volatility, especially during interest rate changes. To manage this risk, consider rebalancing towards underrepresented sectors like utilities or consumer defensives, which may provide stability during market shifts.

Regions Info

  • North America
    60%
  • Europe Developed
    14%
  • Asia Emerging
    7%
  • Japan
    5%
  • No data
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    2%
  • Latin America
    1%

The portfolio's geographic exposure is primarily in North America (60%), with significant allocations in Europe and Asia. This distribution reflects a strong home bias, common in U.S.-based portfolios. While this focus has been advantageous recently, it may limit diversification. Increasing exposure to emerging markets or underrepresented regions like Latin America could enhance diversification and potentially capture growth in different economic cycles.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    29%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio spans various market capitalizations, with a focus on mega-cap (38%) and big-cap (29%) stocks. This allocation provides stability and growth potential, as larger companies often have more resources and market influence. However, the smaller allocation to small-cap (6%) and micro-cap (2%) stocks may limit opportunities for higher growth. Consider increasing exposure to smaller companies to capture potential gains from innovative and rapidly growing businesses.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset weights. This approach aims to maximize returns for a given level of risk. However, it relies on historical data, which may not predict future performance. To enhance efficiency, consider rebalancing the portfolio to align with the Efficient Frontier's recommendations. This process involves adjusting asset allocations based on expected returns and risks, potentially improving overall performance.

Dividends Info

  • Vanguard Total Bond Market Index Fund Admiral Shares 3.10%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.70%
  • VANGUARD REIT INDEX FUND ADMIRAL SHARES 3.70%
  • VANGUARD TOTAL INTERNATIONAL BOND INDEX FUND ADMIRAL SHARES 4.10%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 3.10%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 1.30%
  • Weighted yield (per year) 1.91%

The portfolio's dividend yield stands at 1.91%, with contributions from both equity and bond funds. This yield offers a modest income stream, which can be appealing to investors seeking regular cash flow. However, the focus on growth-oriented equities may limit the overall yield. If income generation is a priority, consider increasing allocations to higher-yielding assets, such as dividend-focused funds or bonds, to enhance cash flow without significantly altering the portfolio's growth potential.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund Admiral Shares 0.04%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.13%
  • VANGUARD REIT INDEX FUND ADMIRAL SHARES 0.13%
  • VANGUARD TOTAL INTERNATIONAL BOND INDEX FUND ADMIRAL SHARES 0.10%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 0.05%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 0.04%
  • Weighted costs total (per year) 0.06%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.06%. This low-cost structure supports better long-term performance by minimizing the drag on returns. Vanguard's reputation for offering cost-effective funds aligns well with the portfolio's strategy. Maintaining this low-cost approach is advantageous, but it's essential to regularly review fund expenses to ensure they remain competitive. Consider exploring other low-cost options if any fund fees increase over time.

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