Balanced Portfolio with High U.S. Exposure and Strong Historical Performance for Moderate Risk Tolerance Investors

Report created on Dec 4, 2024

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 an 80% allocation to the S&P 500 ETF and 20% to the Total International Stock Index Fund ETF. This composition indicates a strong bias towards U.S. equities, with a smaller portion dedicated to international stocks. Such a composition provides a solid foundation for growth, as the U.S. market has been a consistent performer historically. However, the heavy reliance on U.S. equities may expose the portfolio to market-specific risks. To enhance diversification, consider evaluating the balance between domestic and international exposure.

Growth Info

The historical performance of this portfolio is impressive, with a compound annual growth rate (CAGR) of 12.67%. This suggests that a hypothetical investment made in the past would have grown significantly over time. However, the portfolio also experienced a maximum drawdown of -33.88%, highlighting the potential for substantial losses during market downturns. Understanding these dynamics is crucial for setting realistic expectations and preparing for market volatility. To mitigate potential losses, consider strategies that align with the portfolio's risk tolerance while maintaining growth potential.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance was projected with a hypothetical initial investment. The median forecast shows a 273.85% increase, while the 5th and 67th percentiles indicate 12.24% and 385.99% returns, respectively. This analysis provides a range of potential outcomes, accounting for market uncertainties. With 968 simulations showing positive returns, the portfolio demonstrates a promising outlook. To navigate future uncertainties, consider diversifying further and maintaining a balanced approach.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in stocks, with 99.63% allocated to equities, leaving minimal allocation to cash and other assets. This indicates a strong growth orientation but also exposes the portfolio to equity market volatility. While stocks have historically offered higher returns than other asset classes, the lack of diversification across asset types could increase risk. To balance risk and reward, consider introducing other asset classes, such as bonds, to provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with technology leading at 29.02%, followed by financial services and healthcare. Such diversification across sectors can cushion against sector-specific downturns, enhancing overall portfolio resilience. However, the significant tilt towards technology may introduce volatility given the sector's cyclical nature. To optimize sector diversification, regularly review and adjust allocations to align with market trends and economic conditions, ensuring a balanced approach that aligns with long-term goals.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 81.08% exposure, followed by smaller allocations to Europe and Asia. This regional concentration reflects a strong reliance on the U.S. economy, which, while historically robust, may limit growth opportunities in emerging markets. To capitalize on global opportunities and mitigate regional risks, consider increasing exposure to diverse geographic regions, balancing developed and emerging markets to enhance growth potential and risk management.

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 optimization chart suggests potential for improvement along the efficient frontier, balancing risk and return. By adjusting allocations, investors can shift towards a riskier or more conservative stance. To achieve this, consider incorporating uncorrelated asset classes, enhancing diversification. This strategy can optimize risk-adjusted returns, aligning with financial goals. Focus on maintaining a balanced approach, leveraging the efficient frontier to guide decisions, ensuring the portfolio remains aligned with risk tolerance and long-term objectives.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.56%

The portfolio's dividend yield stands at 1.56%, with the S&P 500 ETF yielding 1.2% and the International Stock Index Fund ETF yielding 3.0%. Dividends provide a steady income stream and can enhance total returns, especially in stable market conditions. While the current yield is moderate, reinvesting dividends can contribute to long-term growth. To optimize income potential, consider evaluating dividend reinvestment strategies that align with your financial goals and risk tolerance.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 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 a low 0.04%, reflecting the cost-effectiveness of the chosen Vanguard ETFs. Low costs are advantageous as they contribute to higher net returns over time. Keeping investment costs low is a key principle of successful investing, allowing more of the portfolio's returns to be reinvested for growth. To maintain cost efficiency, continue monitoring expense ratios and consider cost-effective investment vehicles that align with long-term objectives.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey