A balanced and highly diversified portfolio with a strong focus on US equities

Report created on Jan 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is well-diversified, consisting of 40% US equities, 20% international equities, 15% bonds, and smaller allocations in real estate and emerging markets. This composition aligns closely with a balanced investment strategy, providing a mix of growth and income. Compared to typical benchmarks, the portfolio's structure offers a good balance between risk and return. It could benefit from minor adjustments to ensure alignment with changing market conditions. Regularly reviewing the asset allocation ensures that the portfolio remains aligned with your investment goals and risk tolerance.

Growth Info

The portfolio has demonstrated a historic CAGR of 8.96%, which is commendable for a balanced strategy. However, it experienced a significant max drawdown of -29.5%, highlighting periods of volatility. This performance aligns with common benchmarks for balanced portfolios, suggesting a solid historical foundation. It's vital to remember that past performance doesn't predict future results. Regularly monitoring performance against benchmarks can help identify areas for improvement, ensuring the portfolio continues to meet your financial objectives.

Projection Info

Monte Carlo simulations, which use historical data to forecast potential outcomes, suggest a 50th percentile return of 133.67% and an annualized return of 7.44%. While 926 out of 1,000 simulations showed positive returns, these projections are not guaranteed. They provide a range of possible outcomes, helping you understand potential risks and rewards. While simulations offer valuable insights, they rely on historical data and assumptions that may not hold in the future. Regularly reviewing projections can help manage expectations and adjust strategies as needed.

Asset classes Info

  • Stocks
    74%
  • Bonds
    20%
  • Real Estate
    5%
  • Cash
    1%

The portfolio's asset allocation includes 74.25% in stocks, 19.75% in bonds, and 5% in real estate. This distribution is typical for a balanced portfolio, offering a blend of growth and income. Stocks provide growth potential, while bonds and real estate offer stability and income. Compared to benchmarks, this allocation is well-aligned, providing diversification across asset classes. Ensuring a consistent review of asset class weights can help maintain diversification, aligning with your risk tolerance and investment goals.

Sectors Info

  • Technology
    17%
  • Financials
    13%
  • Industrials
    8%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Real Estate
    7%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%

Sector allocation is diversified, with notable exposures in technology (17%), financial services (12.7%), and healthcare (8.1%). This distribution is generally in line with common benchmarks, providing exposure to various economic sectors. Tech-heavy portfolios may experience higher volatility during interest rate hikes, but diversification across sectors can mitigate risks. Regularly assessing sector weights ensures they align with market trends and your investment strategy, potentially enhancing returns while managing risk.

Regions Info

  • North America
    56%
  • Europe Developed
    8%
  • Asia Emerging
    6%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%

The portfolio's geographic allocation leans heavily toward North America (56.4%), with smaller exposures in Europe, Asia, and other regions. This concentration in North America aligns with common benchmarks but may limit exposure to growth opportunities in emerging markets. Geographic diversification can help manage regional risks and capitalize on global economic trends. Reviewing geographic exposures regularly ensures alignment with your investment objectives and risk tolerance, potentially enhancing diversification and returns.

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 appears well-positioned on the Efficient Frontier, offering a strong risk-return ratio. This optimization ensures that the current assets and their allocation provide the best possible balance between risk and return. While efficiency focuses on maximizing returns for a given level of risk, it doesn't guarantee diversification. Regularly reviewing the portfolio's position on the Efficient Frontier can help maintain its efficiency, potentially enhancing returns while managing risk.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • iShares TIPS Bond ETF 2.40%
  • Vanguard Real Estate Index Fund ETF Shares 3.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.59%

With a total yield of 2.59%, the portfolio generates a moderate income stream. Dividend-paying assets like the Schwab U.S. Dividend Equity ETF and Vanguard Real Estate Index Fund ETF contribute significantly. Dividends can provide a stable income, especially in volatile markets, supporting long-term growth. For income-focused investors, maintaining a balance between yield and growth potential is crucial. Regularly reviewing dividend yields ensures they align with your income needs and investment goals, potentially enhancing portfolio returns.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares TIPS Bond ETF 0.19%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) of 0.06% is impressively low, supporting better long-term performance by minimizing costs. Low fees are crucial in maximizing returns, as they compound over time. Compared to industry averages, this cost structure is highly efficient. Regularly reviewing costs and exploring lower-cost alternatives can further enhance returns, ensuring the portfolio remains cost-effective and aligned with your financial objectives.

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