A balanced portfolio with strong US focus and efficient cost structure

Report created on Jan 30, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is primarily composed of ETFs, with 70% in the Vanguard S&P 500 ETF, 20% in the Vanguard Total International Stock Index Fund ETF Shares, and 10% in the Vanguard Total Bond Market Index Fund ETF Shares. This structure aligns with a balanced investment approach, offering exposure to both equities and bonds. Compared to typical benchmark compositions, the portfolio has a strong bias towards US equities, which may limit global diversification. To enhance diversification, consider adjusting the allocation to include more international equities or alternative asset classes, depending on your long-term goals and risk tolerance.

Growth Info

Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 11.50%. This indicates a solid growth trajectory over time, surpassing many benchmarks. However, it experienced a significant maximum drawdown of -31.62%, highlighting potential volatility during market downturns. While past performance is not a guarantee of future results, the portfolio's historical returns suggest a robust growth potential. To better manage future volatility, consider strategies such as rebalancing or diversifying further into defensive sectors or asset classes.

Projection Info

Using Monte Carlo simulations, which estimate potential future outcomes based on historical data, the portfolio shows promising projections. The median forecast suggests a 154.8% increase, with a 67th percentile projection of 216.8%. However, it's essential to note that simulations are based on historical performance and do not account for unforeseen market changes. While the projections are optimistic, maintaining a diversified portfolio and periodically reviewing your asset allocation can help mitigate risks and capitalize on potential opportunities.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset allocation consists of 89% stocks, 10% bonds, and 1% cash. This allocation provides a solid foundation for growth while maintaining some stability through bond exposure. Compared to typical benchmarks, the portfolio is heavily weighted towards equities, which can offer higher returns but also greater volatility. To enhance risk management, consider increasing the bond allocation or incorporating other asset classes, such as real estate or commodities, to further diversify and stabilize returns.

Sectors Info

  • Technology
    26%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a strong concentration in technology at 26%, followed by financial services at 14%. While these sectors have driven recent market gains, they can also lead to increased volatility, particularly during economic shifts or interest rate changes. Compared to benchmarks, the portfolio's sector composition is well-diversified across various industries. However, to reduce potential sector-specific risks, consider periodically reviewing and adjusting sector allocations based on market conditions and your risk tolerance.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily skewed towards North America, with 71% exposure, followed by Europe Developed at 8%. This allocation aligns with many US-based investors' preferences but may limit exposure to growth opportunities in emerging markets. Compared to global benchmarks, the portfolio's geographic diversification could be improved. To enhance diversification and potentially capture higher growth, consider increasing allocations to underrepresented regions, such as emerging markets or Asia Developed.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio's market capitalization breakdown shows a strong emphasis on mega-cap stocks at 42%, followed by big-cap at 30%. This focus on larger companies typically provides stability and lower volatility but may limit exposure to potentially higher-growth small and mid-cap stocks. Compared to benchmarks, the portfolio's market cap distribution is relatively balanced but could benefit from increased small-cap exposure. Consider diversifying into smaller companies to capture growth potential and enhance overall portfolio performance.

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 can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets and allocation changes. By optimizing, you can potentially achieve higher returns for the same level of risk or reduce risk for the same level of returns. This process focuses on reallocating existing assets rather than adding new ones. Consider consulting with a financial advisor or using portfolio optimization tools to explore potential adjustments that align with your risk tolerance and investment goals.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.86%

The portfolio's overall dividend yield is 1.86%, with the Vanguard Total Bond Market Index Fund ETF Shares contributing the highest yield at 3.60%. Dividends can provide a steady income stream and contribute to total returns, particularly in low-interest-rate environments. While the current yield aligns with a balanced investment approach, consider periodically reviewing dividend yields and adjusting allocations to enhance income generation, especially if income is a primary investment goal.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which supports better long-term performance by minimizing costs. Low fees are a significant advantage, as they can enhance net returns over time. Compared to industry averages, the portfolio's cost structure is highly efficient. To maintain this cost advantage, continue monitoring expense ratios and consider cost-effective alternatives when rebalancing or adjusting the portfolio to ensure fees remain low while achieving your investment objectives.

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