A balanced and highly diversified portfolio with a global exposure and low costs
Report created on Aug 1, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VT Vanguard Total World Stock Index Fund
VTWAX - US9220426194 75.00% -
BN Vanguard Total World Bond ETF
BNDW - US92206C5655 25.00%
This portfolio is characterized by a significant allocation to a global stock index fund (75%) and a global bond ETF (25%), offering a balanced approach between growth and income. The high allocation to the Vanguard Total World Stock Index Fund suggests a strong emphasis on capital appreciation, while the Vanguard Total World Bond ETF provides income and reduces overall volatility. This mix is consistent with a balanced investment strategy, aiming to mitigate risks through diversification across both asset classes and geographically, without overly concentrating in any single market or sector.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 10.40%, with a maximum drawdown of -26.91%. These figures indicate a resilient performance through market cycles, balancing growth and risk effectively. The days contributing most to returns highlight the importance of staying invested over the long term, as missing these key days can significantly impact overall performance. Comparing these metrics to benchmarks would further contextualize its relative strength in various market conditions.
Projection
Monte Carlo simulations, which use historical data to forecast a range of potential future outcomes, suggest a median annualized return of 7.83% across 1,000 scenarios. This analysis helps in understanding the portfolio's resilience under different market conditions, though it's important to remember that these projections are speculative and cannot guarantee future performance. The broad range of outcomes, from the 5th to the 67th percentile, also underscores the inherent uncertainty in investing and the need for a long-term perspective.
Asset classes
- Stocks 74%
- Bonds 24%
- Cash 2%
The portfolio's asset class distribution, with a 74% allocation to stocks and a 24% allocation to bonds, aligns with a balanced risk profile that seeks growth while buffering against market downturns. The inclusion of a small cash position (2%) offers liquidity for rebalancing or taking advantage of new investment opportunities. This allocation should be periodically reviewed to ensure it continues to match the investor's risk tolerance and investment horizon.
Sectors
- Technology 19%
- Financials 13%
- Industrials 9%
- Consumer Discretionary 8%
- Health Care 7%
- Telecommunications 6%
- Consumer Staples 4%
- Basic Materials 3%
- Energy 3%
- Real Estate 2%
- Utilities 2%
Sector allocation covers a broad spectrum, with technology (19%) and financial services (13%) leading, followed by industrials and consumer cyclical sectors. This sectoral spread indicates a tilt towards growth-oriented investments, with a reasonable balance across defensive and cyclical sectors to hedge against various economic cycles. However, investors should be mindful of overexposure to any single sector, which can increase volatility.
Regions
- North America 49%
- Europe Developed 11%
- Asia Emerging 4%
- Japan 4%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is heavily weighted towards North America (49%), with diversified exposure across developed Europe, Asia, and emerging markets. This global diversification helps in spreading risk and capturing growth from different economies. However, the relatively low exposure to emerging markets may limit potential high-growth opportunities, suggesting a review of geographic allocation could be beneficial for long-term growth prospects.
Market capitalization
- Mega-cap 32%
- Large-cap 23%
- Mid-cap 14%
- Small-cap 4%
- Micro-cap 1%
The market capitalization breakdown shows a preference for mega (32%) and big-cap (23%) companies, which typically offer stability and lower volatility. Medium, small, and micro-cap stocks, although constituting a smaller portion of the portfolio, can provide growth potential. Balancing these allocations can enhance returns while managing risk, especially in different market phases.
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.
Considering the Efficient Frontier, this portfolio appears well-positioned for optimizing the risk-return trade-off based on its current asset allocation. However, continuous monitoring and occasional rebalancing are essential to maintain this efficiency, especially as market conditions and the investor's financial goals evolve. Adjustments may include shifting asset class weights or rebalancing sector and geographic exposures to align with the Efficient Frontier's principles.
Dividends
- Vanguard Total World Bond ETF 4.00%
- Vanguard Total World Stock Index Fund 1.30%
- Weighted yield (per year) 1.98%
The dividend yield from the bond ETF (4.00%) and the stock index fund (1.30%) contributes to the portfolio's overall yield of 1.98%. This income stream, alongside capital appreciation, plays a vital role in the portfolio's total return, especially in volatile or bearish market conditions. Investors should consider the impact of dividends on their income needs and tax situation.
Ongoing product costs
- Vanguard Total World Bond ETF 0.05%
- Vanguard Total World Stock Index Fund 0.09%
- Weighted costs total (per year) 0.08%
The portfolio's total expense ratio (TER) of 0.08% is impressively low, maximizing the potential for net returns. Low costs are crucial for long-term investment success, as they compound over time, significantly impacting overall wealth accumulation. This cost efficiency is a strong aspect of the portfolio, aligning with best practices in investment management.
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