A balanced portfolio with a strategic mix of equities and bonds for moderate risk investors
Report created on Aug 3, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 45.00% -
VC Vanguard Short-Term Corporate Bond Index Fund ETF Shares
VCSH - US92206C4096 20.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00% -
VW Vanguard FTSE Emerging Markets Index Fund ETF Shares
VWO - US9220428588 15.00%
This portfolio is well-structured, consisting of 45% in a broad-market equity ETF, 20% in short-term corporate bonds, 20% in international stocks, and 15% in emerging markets. Its asset allocation reflects a balanced approach, aiming to capture growth through equities while mitigating risk with bonds. This composition is commendable for its diversification across asset classes, sectors, and geographies, aligning with best practices for investors seeking moderate risk exposure.
Growth
The portfolio has shown a Compound Annual Growth Rate (CAGR) of 9.72%, with a maximum drawdown of -29.41%. These figures suggest a resilient performance through market cycles, balancing growth with risk management effectively. The days contributing most to returns highlight significant gains in short periods, a common characteristic in equity markets. Comparing this performance to benchmarks could provide further insight into its relative strength.
Projection
Monte Carlo simulations project a wide range of outcomes, with a median increase of 162.3% in portfolio value, indicating potential for substantial growth. However, the 5th percentile outcome of -5.3% underscores the inherent risks. These projections, while based on historical data, offer a glimpse into possible future scenarios but cannot guarantee outcomes. Investors should consider these forecasts as part of a broader decision-making framework.
Asset classes
- Stocks 79%
- Bonds 20%
- Cash 1%
The portfolio's allocation to 79% stocks and 20% bonds is a classic balanced approach, suitable for moderate risk tolerance. This mix aims to leverage the growth potential of equities while using bonds to cushion against market volatility. The slight cash holding enhances liquidity, allowing for flexibility in response to market changes or opportunities. This asset class distribution supports a strategy focused on long-term growth with managed risk.
Sectors
- Technology 20%
- Financials 14%
- Consumer Discretionary 9%
- Industrials 8%
- Telecommunications 7%
- Health Care 7%
- Consumer Staples 5%
- Basic Materials 3%
- Energy 3%
- Utilities 2%
- Real Estate 2%
Sector allocation is well-diversified, with a significant emphasis on technology, financial services, and consumer cyclicals. This sector spread is indicative of a growth-oriented strategy, as these areas often lead market expansions. However, high allocations in fast-growing sectors can introduce volatility. Balancing this with more defensive sectors like healthcare and consumer staples could offer a more stable return profile during market downturns.
Regions
- North America 46%
- Asia Emerging 12%
- Europe Developed 8%
- Asia Developed 5%
- Japan 3%
- Africa/Middle East 2%
- Latin America 2%
- Australasia 1%
Geographic distribution shows a strong bias towards North America and a meaningful allocation to emerging and developed markets outside the U.S. This global exposure is beneficial for diversification and capturing growth in different economic cycles. However, the portfolio may benefit from increased exposure to underrepresented regions like Europe Emerging and Australasia to further enhance global diversification.
Market capitalization
- Mega-cap 37%
- Large-cap 26%
- Mid-cap 14%
- Small-cap 2%
The focus on mega and big-cap stocks suggests a preference for stability and established companies, likely to reduce volatility and provide steady returns. However, the relatively smaller allocation to medium, small, and micro-caps limits exposure to high-growth potential sectors. Incrementally increasing investments in smaller market cap segments could offer higher growth prospects, albeit with increased risk.
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's current allocation suggests it is positioned near the Efficient Frontier, indicating an optimal balance between risk and return based on historical data. However, continuous monitoring and adjustments are necessary to maintain this balance, especially in response to changing market conditions. Regularly reviewing asset allocation and diversification can help in staying aligned with the Efficient Frontier.
Dividends
- Vanguard Short-Term Corporate Bond Index Fund ETF Shares 3.80%
- Vanguard S&P 500 ETF 1.20%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.80%
- Vanguard Total International Stock Index Fund ETF Shares 2.90%
- Weighted yield (per year) 2.30%
The dividend yields across the portfolio components contribute to its total yield of 2.30%, providing a steady income stream in addition to potential capital gains. This yield is a critical component of total return, especially in volatile or flat markets. Reviewing and potentially increasing allocations to higher-yielding assets could enhance income without significantly increasing risk.
Ongoing product costs
- Vanguard Short-Term Corporate Bond Index Fund ETF Shares 0.04%
- Vanguard S&P 500 ETF 0.03%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.04%
The portfolio's overall expense ratio of 0.04% is impressively low, maximizing the potential for net returns. Low costs are crucial for long-term investment success, as they compound positively over time. This portfolio exemplifies cost-efficient investing, which is particularly important in a low-yield environment.
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