Balanced portfolio with a strong foundation in index funds and diversified sector exposure

Report created on Jun 9, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is structured around a core of index funds, covering a broad spectrum of asset classes and market capitalizations. The largest allocation is to the Nationwide S&P 500 Index Fund, comprising over 31% of the portfolio, indicating a strong foundation in large-cap US equities. The inclusion of mid-cap, small-cap, international, and emerging markets funds suggests an intentional approach to diversification across different segments of the global market. The presence of a REIT and a high-yield corporate bond fund adds further diversification, albeit with a relatively minor allocation.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.62%, with a maximum drawdown of -35.74%. This performance indicates a balanced risk-return profile, suitable for a medium to long-term investment horizon. The few days that contribute to a significant portion of returns highlight the impact of market volatility on performance. Comparing this to benchmark indices would provide context, but the diversified nature and solid historical performance suggest a well-constructed portfolio for growth with managed risk.

Projection Info

Monte Carlo simulations, which use historical data to project future performance under varying conditions, show a wide range of outcomes for this portfolio. With 939 out of 1,000 simulations yielding positive returns, the median projection suggests a potential 179.6% increase, highlighting the portfolio’s growth potential. However, the presence of negative outcomes in the 5th percentile underscores the inherent uncertainties in market investments. These projections serve as a useful tool for risk assessment but should not be the sole basis for investment decisions.

Asset classes Info

  • Stocks
    97%
  • Bonds
    3%

The portfolio is heavily weighted towards stocks (97%), with a minor allocation to bonds (3%), and no direct cash or alternative investments. This asset class distribution supports a growth-oriented investment strategy but may exhibit higher volatility due to the minimal fixed-income cushion. For investors seeking balance, a slight adjustment to include more bonds or cash equivalents could provide better risk mitigation during market downturns, without significantly compromising long-term growth potential.

Sectors Info

  • Technology
    18%
  • Financials
    17%
  • Industrials
    12%
  • Health Care
    11%
  • Consumer Discretionary
    9%
  • Real Estate
    8%
  • Consumer Staples
    6%
  • Telecommunications
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%

Sector allocation is well-spread, with technology and financial services taking the lead, followed by industrials and healthcare. This sector diversity supports resilience against sector-specific downturns, though the tech-heavy focus may increase sensitivity to market fluctuations in this sector. Given the rapid evolution and growth potential in technology, this allocation could favor growth but warrants monitoring to manage sector-specific risks effectively.

Regions Info

  • North America
    77%
  • Europe Developed
    7%
  • Asia Emerging
    5%
  • No data
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (77%), with modest exposure to developed Europe and emerging Asian markets. This concentration in North American equities aligns with the portfolio's overall risk profile but may limit exposure to potential growth in other regions. Increasing allocations to developed Europe or emerging markets could enhance global diversification and potentially tap into higher growth rates outside the US.

Market capitalization Info

  • Mega-cap
    28%
  • Large-cap
    27%
  • Mid-cap
    20%
  • Small-cap
    17%
  • Micro-cap
    5%

The portfolio's market capitalization distribution, with a leaning towards mega and big-cap stocks, underscores a preference for stability and established companies. Medium, small, and micro caps represent a significant portion, introducing growth potential and volatility. This blend supports a balanced approach, capturing the stability of large caps and the growth potential of smaller caps, but the allocation could be optimized to better match the investor’s risk tolerance and return expectations.

Redundant positions Info

  • NATIONWIDE SMALL CAP INDEX FUND CLASS R6
    NATIONWIDE MID CAP MARKET INDEX FUND CLASS R6
    High correlation

The high correlation between the Nationwide Small Cap and Mid Cap Index Funds suggests redundancy, limiting diversification benefits. In portfolio theory, reducing overlap can enhance risk-adjusted returns by spreading exposure across less correlated assets. Identifying and replacing one of these funds with an option offering lower correlation to the portfolio's existing components could improve overall portfolio 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.

Click on the colored dots to explore allocations.

Optimizing the portfolio for efficiency suggests a potential expected return of 8.38% at a risk level of 9.35%, indicating room for improvement in the risk-return balance. Focusing on reducing overlapping assets and possibly rebalancing towards underrepresented sectors or geographies could enhance performance. This optimization process, while based on historical data, aims to align the portfolio more closely with the Efficient Frontier, achieving a better balance between risk and return.

Dividends Info

  • NATIONWIDE INTERNATIONAL INDEX FUND CLASS R6 3.60%
  • NATIONWIDE SMALL CAP INDEX FUND CLASS R6 5.30%
  • NATIONWIDE MID CAP MARKET INDEX FUND CLASS R6 12.00%
  • NATIONWIDE S&P 500 INDEX FUND CLASS R6 2.80%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 2.90%
  • VANGUARD REIT INDEX FUND ADMIRAL SHARES 4.00%
  • VANGUARD VALUE INDEX FUND ADMIRAL SHARES 2.30%
  • Vanguard High-yield Corporate Fund Admiral Shares 6.30%
  • Weighted yield (per year) 4.66%

The portfolio's dividend yield stands at 4.66%, contributed by a mix of equity and high-yield bond funds, enhancing income generation while supporting total return. This yield is an attractive feature for income-focused investors, providing a steady cash flow. However, the focus should remain on total return, balancing dividend yield with capital appreciation potential to ensure alignment with the investor’s financial goals.

Ongoing product costs Info

  • NATIONWIDE INTERNATIONAL INDEX FUND CLASS R6 0.29%
  • NATIONWIDE SMALL CAP INDEX FUND CLASS R6 0.26%
  • NATIONWIDE MID CAP MARKET INDEX FUND CLASS R6 0.25%
  • NATIONWIDE S&P 500 INDEX FUND CLASS R6 0.18%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.13%
  • VANGUARD REIT INDEX FUND ADMIRAL SHARES 0.13%
  • VANGUARD VALUE INDEX FUND ADMIRAL SHARES 0.05%
  • Vanguard High-yield Corporate Fund Admiral Shares 0.12%
  • Weighted costs total (per year) 0.18%

With a Total Expense Ratio (TER) averaging 0.18%, the portfolio's costs are impressively low, especially for a diversified mix of index funds. Lower costs directly translate to better net returns for the investor over time. This cost efficiency is a strong aspect of the portfolio, indicating sound fund selection that maximizes investor value while minimizing unnecessary expenses.

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