Balanced Portfolio with Strong Global Equity Focus and Minimal Bond Allocation
Report created on Jul 28, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 90.00% -
BN Vanguard Total Bond Market Index Fund ETF Shares
BND - US9219378356 10.00%
This portfolio is predominantly invested in global equities through the Vanguard Total World Stock Index Fund ETF Shares, accounting for 90% of its allocation, while the remaining 10% is dedicated to bonds via the Vanguard Total Bond Market Index Fund ETF Shares. This composition suggests a strategy that leans towards growth while maintaining a conservative buffer of fixed income to mitigate volatility. The high diversification score and the balanced risk profile indicate a well-thought-out approach to achieving broad market exposure.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.34%, with a maximum drawdown of -31.56%. This performance, coupled with the fact that a significant portion of returns came from a limited number of days, underscores the importance of staying invested over the long term to capture key market gains. The balanced risk classification aligns with the portfolio's resilience during market fluctuations.
Projection
Monte Carlo simulations, which use historical data to forecast a range of possible outcomes, suggest a median increase of 126.6% in portfolio value. While these projections provide a useful glimpse into potential future performance, it's crucial to remember that they are based on past trends, and actual results can vary. The simulations' wide range of outcomes emphasizes the importance of maintaining a diversified and balanced portfolio to navigate uncertainty.
Asset classes
- Stocks 89%
- Bonds 10%
- Cash 1%
The asset class distribution, with 89% in stocks and 10% in bonds, is indicative of a growth-oriented strategy with a moderate cushion against market downturns. This allocation is particularly suited for investors with a medium to long-term horizon, balancing the higher growth potential of equities against the stability offered by bonds. Adjusting the ratio between these asset classes can tailor the portfolio's risk and return profile to individual preferences.
Sectors
- Technology 22%
- Financials 16%
- Industrials 10%
- Consumer Discretionary 10%
- Health Care 8%
- Telecommunications 7%
- Consumer Staples 5%
- Basic Materials 3%
- Energy 3%
- Real Estate 2%
- Utilities 2%
Sector allocation is heavily weighted towards technology and financial services, making up 38% of the portfolio. This concentration in high-growth areas can offer significant upside but also increases susceptibility to sector-specific risks. Diversifying across a broader range of sectors could help mitigate this risk, potentially smoothing out returns over time. The presence in industrials, consumer cyclicals, and healthcare also adds a layer of balance to the sectoral exposure.
Regions
- North America 58%
- Europe Developed 13%
- Asia Emerging 5%
- Japan 5%
- Asia Developed 4%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is heavily weighted towards North America (58%), with meaningful exposure to developed Europe and a modest presence in emerging Asian markets. This distribution reflects a strong foundation in more stable, developed markets while capturing some growth potential from emerging economies. Increasing exposure to underrepresented regions could offer additional diversification benefits and access to high-growth opportunities outside of the North American market.
Market capitalization
- Mega-cap 38%
- Large-cap 28%
- Mid-cap 17%
- Small-cap 5%
- Micro-cap 1%
The market capitalization breakdown shows a significant tilt towards mega and big-cap stocks, which constitute 66% of the portfolio. This bias towards larger companies typically offers stability and resilience but may limit growth potential compared to smaller caps. Incorporating a greater mix of medium, small, and micro-cap stocks could enhance growth prospects and diversification.
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 its current risk-return profile. However, there's always room for optimization, particularly in enhancing diversification and adjusting the risk-return balance to match evolving investment goals. Regularly reviewing and adjusting asset allocation can ensure the portfolio continues to align with the investor's objectives and market conditions.
Dividends
- Vanguard Total Bond Market Index Fund ETF Shares 3.80%
- Vanguard Total World Stock Index Fund ETF Shares 1.70%
- Weighted yield (per year) 1.91%
The portfolio's dividend yield stands at 1.91%, with the bond component contributing a higher yield than the equities. This income stream can provide a buffer during market downturns and contribute to total returns. For investors seeking higher income, rebalancing towards assets with higher dividend yields or exploring dividend-focused funds could be beneficial.
Ongoing product costs
- Vanguard Total Bond Market Index Fund ETF Shares 0.03%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.07%
The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.07%, which is commendable. Lower costs directly translate to higher net returns over time, underscoring the importance of cost-conscious investment choices. Maintaining this focus on cost efficiency, especially when considering additional investments or rebalancing, will support long-term performance.
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