This portfolio has only about 10 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.

Balanced Portfolio with Broad Diversification and Low Costs

Report created on Jul 29, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists predominantly of two ETFs: the Vanguard S&P 500 ETF (80%) and the Vanguard Total International Stock Index Fund ETF Shares (20%). This composition shows a strong preference for large-cap U.S. stocks, with a smaller allocation to international equities. The portfolio is broadly diversified across multiple sectors and regions, which helps mitigate risks associated with investing in a single market or sector. However, it is heavily weighted towards U.S. equities, which could expose it to country-specific risks.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 11.75%. However, it has also experienced significant volatility, with a maximum drawdown of -33.88%. This indicates that while the portfolio has the potential for high returns, it also carries a risk of substantial short-term losses. Understanding this balance between risk and reward is crucial for aligning the portfolio with long-term investment goals.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. Assuming a hypothetical initial investment, the results show a wide range of potential outcomes. The 5th percentile projects an 18.5% return, while the median (50th percentile) projects a 234.68% return, and the 67th percentile projects a 351.89% return. The annualized return across all simulations is 10.54%, indicating a high probability of positive returns, though individual outcomes can vary significantly.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is primarily allocated to stocks (99.3%), with minimal holdings in cash (0.67%) and other assets (0.03%). This heavy allocation to equities suggests a focus on growth rather than income or capital preservation. While this can be beneficial for long-term growth, it also increases exposure to market volatility. For a balanced risk profile, it might be worth considering a small allocation to bonds or other fixed-income assets to reduce overall risk.

Sectors Info

  • Technology
    27%
  • Financials
    14%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is well-diversified, with significant exposure to Technology (27.2%), Financial Services (14.1%), and Healthcare (11.8%). This diversification helps to spread risk across different parts of the economy. However, the heavy weighting in Technology could make the portfolio vulnerable to sector-specific downturns. A more balanced sector allocation could help mitigate this risk and provide more stable returns over time.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (81.1%), with smaller allocations to Europe Developed (8.3%) and Japan (3.3%). While this provides exposure to some of the world's largest and most stable markets, it also means the portfolio is less diversified globally. Increasing exposure to emerging markets and other regions could enhance diversification and reduce the impact of regional economic downturns.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.66%

The portfolio does not focus heavily on dividend yield, which can be seen as a drawback for investors seeking regular income. However, the focus on growth stocks, particularly in the Technology sector, suggests a strategy aimed at capital appreciation rather than income generation. For those needing regular cash flow, incorporating higher-yielding assets or dividend-focused funds could be beneficial.

Ongoing product costs Info

  • 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 costs are impressively low, with an average expense ratio of just 0.04%. Low costs are crucial for maximizing net returns over time, as they reduce the drag on performance. This cost-efficiency is a significant advantage, especially for long-term investors. Maintaining a focus on low-cost investments will continue to benefit the portfolio's overall performance.

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