A balanced portfolio with strong domestic equity focus and moderate international exposure
Report created on Jan 16, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 72.98% -
NL VanEck Uranium+Nuclear Energy ETF
NLR - US92189F6016 17.64% -
BN Vanguard Total Bond Market Index Fund ETF Shares
BND - US9219378356 6.26% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 1.62% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 1.51%
The portfolio is heavily weighted towards equities, with a significant 72.98% allocation to the Vanguard Total Stock Market Index Fund ETF. This high equity exposure is typical for a balanced portfolio, aiming to capitalize on long-term growth. The remaining allocations include 17.64% in a specialized VanEck Uranium+Nuclear Energy ETF and 6.26% in bonds via the Vanguard Total Bond Market Index Fund ETF. Compared to a typical balanced portfolio, this one has a higher concentration in equities, which can lead to increased volatility. Consider adding more bonds or other asset classes to reduce risk and enhance diversification.
Growth
Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 12.63%. This is quite impressive and suggests effective asset selection and market timing. However, the maximum drawdown of -33.37% indicates significant risk during market downturns. While past performance is not a guarantee of future results, it can provide insight into how the portfolio might react under similar conditions. To mitigate potential losses, consider strategies that protect against downside risk, such as diversification or hedging.
Projection
Forward projections using Monte Carlo simulations show a range of potential outcomes. With 1,000 simulations, the median (50th percentile) suggests a substantial growth of 197.59%. However, the 5th percentile indicates a much lower return of 8.22%, highlighting the uncertainty in future performance. Monte Carlo simulations use historical data to predict possible outcomes, but they cannot account for unforeseen market changes. To prepare for varied futures, regularly review and adjust your portfolio to align with your risk tolerance and investment goals.
Asset classes
- Stocks 93%
- Bonds 6%
The portfolio's asset allocation is heavily skewed towards stocks, comprising 93.37% of the total. This high equity allocation offers potential for growth but also increases exposure to market volatility. Bonds make up 6.16%, providing some stability and income. Compared to typical balanced portfolios, this one is more aggressive. For better risk management, consider increasing the bond allocation or introducing alternative assets to balance growth and stability, especially if nearing retirement or needing to preserve capital.
Sectors
- Technology 23%
- Utilities 10%
- Financials 10%
- Energy 9%
- Industrials 9%
- Health Care 9%
- Consumer Discretionary 8%
- Telecommunications 6%
- Consumer Staples 4%
- Real Estate 2%
- Basic Materials 2%
Sector allocation shows a strong emphasis on technology, representing 23.21% of the portfolio. This aligns with current trends where tech often leads growth but also introduces volatility, especially during interest rate changes. Other sectors like utilities and financial services provide some balance, but there is notable concentration risk. To enhance diversification, consider adjusting sector weights to reduce reliance on tech and include sectors with different economic sensitivities. This can help smooth returns across various market cycles.
Regions
- North America 85%
- Europe Developed 3%
- Asia Emerging 2%
- Australasia 1%
- Europe Emerging 1%
The portfolio is predominantly North America-focused, with 85.46% exposure, limiting international diversification. This heavy domestic bias can lead to missed opportunities in global markets, especially in emerging economies with high growth potential. While North American markets offer stability, consider increasing exposure to international markets to capture diverse growth opportunities and reduce regional risk. Balancing geographic exposure can help mitigate the impact of localized economic downturns.
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 could benefit from optimization using the Efficient Frontier, which identifies the best risk-return ratio based on current assets. This approach seeks to maximize returns for a given level of risk or minimize risk for a given return. While the portfolio is moderately diversified, fine-tuning asset weights could improve efficiency. Regularly reassessing and adjusting allocations ensures that the portfolio remains aligned with market conditions and personal investment goals.
Dividends
- Vanguard Total Bond Market Index Fund ETF Shares 3.70%
- Schwab U.S. Dividend Equity ETF 3.60%
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Vanguard Total International Stock Index Fund ETF Shares 3.40%
- Weighted yield (per year) 1.29%
The portfolio's dividend yield is relatively modest at 1.29%, with the highest contributions from the Vanguard Total Bond Market and Schwab U.S. Dividend Equity ETFs. Dividends can provide a steady income stream, which is particularly beneficial during market downturns when capital gains are limited. If income generation is a priority, consider increasing allocations to higher-yielding assets. Balancing growth and income can create a more stable portfolio, especially for income-focused investors.
Ongoing product costs
- Vanguard Total Bond Market Index Fund ETF Shares 0.03%
- VanEck Uranium+Nuclear Energy ETF 0.61%
- Schwab U.S. Dividend Equity ETF 0.06%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.13%
The total expense ratio (TER) of the portfolio is 0.13%, which is impressively low. Low costs are crucial for long-term investment success, as they enhance net returns. This portfolio is well-aligned with cost-efficient investing principles, allowing more capital to remain invested. Keep monitoring fees and consider replacing high-cost holdings with lower-cost alternatives if they arise. Maintaining a low-cost structure helps maximize returns and compounds growth over time.
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