Globally diversified two fund equity portfolio with low costs and moderate risk profile
Report created on Jul 8, 2026Risk profile
4/7
Diversification profile
4/5
Positions
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VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 75.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 25.00%
This portfolio is very simple: two broad stock index ETFs, one international at 75% and one total US market at 25%. That means every dollar is in equities, split mostly outside the US with a smaller slice in US stocks. Structurally this is a classic “total market” style approach, capturing thousands of companies through just two funds. The high international weight is notable because many investors lean much more heavily toward their home market. A structure like this keeps administration easy while still giving wide exposure. It also means that changes in global equity markets directly drive the portfolio, without bonds or cash to buffer big swings.
Growth
From mid‑2016 to mid‑2026, $1,000 in this mix grew to about $2,885. That’s a compound annual growth rate (CAGR) of 11.22%, which is like an average yearly “speed” over the whole period. The max drawdown was about ‑34.6% during early 2020, similar in depth to the benchmarks and recovered in roughly seven months after the bottom. Compared with a pure US market index, the portfolio underperformed by 4 percentage points per year, and trailed the global market by 1.51 points annually. This reflects the heavy non‑US tilt: US stocks were especially strong over this decade. The need to stay invested through only 28 key up days also shows how missing brief rebounds can dramatically change results.
Projection
The Monte Carlo simulation projects many possible future paths based on historical return and volatility patterns. Think of it as running the next 15 years a thousand different ways to see a range of outcomes, not a single prediction. Here, the median scenario grows $1,000 to about $2,708, with a central “likely” band from roughly $1,802 to $4,092. The very wide full range, from around $1,006 to $7,485, underlines how uncertain long‑term equity outcomes can be. The average simulated annual return of 7.93% is lower than the past decade’s realized 11.22%, illustrating that high past returns don’t automatically repeat. These projections assume the long‑run characteristics of global equities stay roughly similar, which may or may not hold.
Asset classes
- Stocks 100%
All of this portfolio sits in stocks, with 0% in bonds, cash, or alternatives. That makes the asset‑class mix straightforward but also means there’s no built‑in stabilizer during equity bear markets. In many broad indices, a 100% equity allocation would be considered growth‑oriented, even if the holdings themselves are well diversified. Because asset class choice is one of the main drivers of risk, this all‑stock stance explains why the portfolio’s drawdowns can be large and why long‑term return potential is higher than a mixed stock‑bond blend. The internal diversification among different types of stocks helps spread company‑specific risk but doesn’t remove the overall risk of global equity markets moving together.
Sectors
- Technology 22%
- Financials 20%
- Industrials 15%
- Consumer Discretionary 9%
- Health Care 8%
- Basic Materials 6%
- Telecommunications 6%
- Consumer Staples 5%
- Energy 5%
- Utilities 3%
- Real Estate 3%
Sector exposure is quite balanced relative to broad global equity benchmarks. Technology is the largest slice at 22%, followed by financials at 20% and industrials at 15%, then a mix of consumer, health care, and other cyclical and defensive areas. No single sector dominates in an extreme way, and the weights line up closely with what’s seen in global total‑market funds. This alignment is usually a good sign for diversification because it avoids making big sector bets. A moderate tech tilt can increase sensitivity to innovation cycles and interest rate moves, but the strong presence of financials, industrials, and health care provides different economic drivers that may behave differently across business cycles.
Regions
- North America 31%
- Europe Developed 27%
- Asia Developed 12%
- Japan 11%
- Asia Emerging 10%
- Australasia 3%
- Africa/Middle East 3%
- Latin America 2%
- Europe Emerging 1%
Geographically, this portfolio is much more global than a typical US‑heavy mix. Roughly 31% is in North America, with large allocations to developed Europe (27%), developed Asia (12%), and Japan (11%), plus meaningful stakes in emerging regions such as Asia emerging, Latin America, and Africa/Middle East. Compared with a standard world market index, the US portion here is noticeably lighter and non‑US markets are more prominent. This global spread reduces dependence on a single economy or currency, which is a positive for diversification. It also means performance will reflect how non‑US markets do relative to the US; in periods when global ex‑US lags, the portfolio may trail a US‑focused benchmark, and vice versa.
Market capitalization
- Mega-cap 45%
- Large-cap 30%
- Mid-cap 17%
- Small-cap 4%
- Micro-cap 1%
Market‑cap exposure is tilted toward the largest companies but still includes smaller firms. Roughly 45% is in mega‑caps and 30% in large‑caps, so about three‑quarters of the portfolio rides on big global leaders. Another 17% is in mid‑caps, with smaller allocations to small and micro‑caps. This pattern is typical for total‑market index funds, which weight companies by size. Larger companies tend to be more established and can provide some stability, while mid‑ and small‑caps can be more volatile but offer different growth dynamics. The presence of all size segments helps diversify company‑specific risk and avoids relying only on either the giants or the smallest, more speculative names.
True holdings
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23 Taiwan Semiconductor Manufacturing Co. Ltd. 2.96%
Part of fund(s):- Vanguard Total International Stock Index Fund ETF Shares
-
NV NVIDIA Corporation 1.68%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
SS Samsung Electronics Co Ltd 1.63%
Part of fund(s):- Vanguard Total International Stock Index Fund ETF Shares
-
AA Apple Inc. 1.58%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
00 SK Hynix Inc 1.39%
Part of fund(s):- Vanguard Total International Stock Index Fund ETF Shares
-
MS Microsoft Corporation 1.15%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
AS ASML Holding N.V. 1.04%
Part of fund(s):- Vanguard Total International Stock Index Fund ETF Shares
-
AM Amazon.com Inc 0.90%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
GO Alphabet Inc Class A 0.76%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
AV Broadcom Inc 0.73%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
- Top 10 total 13.80%
Looking through to the top underlying holdings, the largest individual exposures include Taiwan Semiconductor, NVIDIA, Samsung Electronics, Apple, SK Hynix, Microsoft, ASML, Amazon, Alphabet, and Broadcom. These are global giants, many tied to technology and semiconductors. Because both ETFs hold some of the same big names, the effective weight of these companies is higher than it might appear from just one fund. That’s the idea of “overlap”: the same company showing up in multiple funds increases concentration in those names. The coverage here only includes ETF top‑10s, so overlap is likely understated, but it still highlights that a meaningful slice of the portfolio’s behavior will be driven by a handful of major tech‑linked firms.
Factors
Factor exposure is mostly near market‑like levels, with a couple of notable tilts. Factor investing looks at characteristics such as value, size, momentum, quality, low volatility, and yield — think of them as “flavors” that explain how portfolios behave. This portfolio shows high exposure to yield (61%) and low volatility (67%), while the other factors sit close to neutral. A higher yield tilt means it leans somewhat toward stocks that pay more in dividends than the broad market. A higher low‑volatility tilt suggests a mild preference for stocks that historically swing less than average. Together, these tilts can lead to a slightly smoother ride and a greater share of total return coming from income, while still staying broadly diversified.
Risk contribution
-
Vanguard Total International Stock Index Fund ETF Shares
Weight: 75.00% 75.0% -
Vanguard Total Stock Market Index Fund ETF Shares
Weight: 25.00% 25.0%
Risk contribution measures how much each holding adds to the portfolio’s overall ups and downs, which can differ from its weight. Here, both funds contribute to risk almost exactly in line with their allocations: the international ETF at 75% weight contributes about 75% of risk, and the US ETF at 25% weight contributes about 25%. A risk/weight ratio of roughly 1.0 for both suggests their volatilities and correlations are similar at the portfolio level. This is a clear, intuitive structure where position size and risk contribution move together. It also means that any major move in international equities will drive most of the portfolio’s volatility, consistent with that fund being the dominant holding.
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 efficient frontier analysis shows this allocation is already on or very close to the frontier, meaning it’s an efficient use of the two chosen funds. The Sharpe ratio, which compares excess return to volatility, is 0.47 for the current mix, while the maximum‑Sharpe combination of the same funds is higher at 0.79 with more risk and return. The minimum‑variance portfolio has virtually the same risk and return as the current one, with a somewhat higher Sharpe of 0.65. Since the current portfolio lies near the curve, it’s not leaving much risk‑return “on the table” given these building blocks; any material shift would mainly involve choosing a different risk level rather than fixing an inefficient combination.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.10%
- Vanguard Total International Stock Index Fund ETF Shares 2.60%
- Weighted yield (per year) 2.22%
The combined dividend yield of about 2.22% shows that a meaningful part of expected return comes from regular cash payments. The international ETF has a higher yield (2.60%) than the US total market ETF (1.10%), so the 75% international weight pulls the overall yield up. Dividends can help smooth the experience of holding stocks by providing tangible income even when prices move sideways, though they are not guaranteed and can be cut. In a 100% equity portfolio, yield levels like this are fairly typical for a globally diversified mix, and they align with the earlier factor result showing a mild tilt toward higher‑yielding stocks.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.04%
Costs are impressively low, with a total expense ratio (TER) around 0.04% per year across the two ETFs. TER is the ongoing fee charged by funds, and it quietly chips away at returns over time, so keeping it low is important. Here, the fee level is well below many actively managed funds and even lower than many passive alternatives. That means more of the portfolio’s gross market return actually reaches the investor. Over long periods, the difference between paying, say, 0.04% and something like 0.5% or 1% compounds significantly, so this cost profile is a strong structural advantage of the portfolio.
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