A balanced portfolio heavily weighted towards US stocks with low costs and strong historic returns

Report created on Mar 27, 2025

Risk profile Info

4/7
Balanced
← Less risk More risk →

Diversification profile Info

3/5
Moderately Diversified
← Less diversification More diversification →

Positions

The portfolio is primarily composed of two ETFs: Vanguard Total Stock Market Index Fund ETF Shares (80%) and Vanguard Total World Stock Index Fund ETF Shares (20%). The portfolio leans heavily towards US equities, with a minor allocation to global stocks. This composition offers substantial exposure to the US market while maintaining a small degree of international diversification. The portfolio's structure aligns closely with a balanced risk profile, providing a moderate level of diversification. However, it may benefit from additional asset classes to enhance diversification. Consider incorporating fixed income or alternative assets for further balance.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.34%, showcasing impressive growth. Using a hypothetical initial investment, this translates to significant wealth accumulation over time. The portfolio's max drawdown of -34.83% indicates exposure to market volatility, which is typical for equity-heavy portfolios. Compared to benchmarks, the performance is robust, yet it's crucial to remember that past performance doesn't guarantee future results. The portfolio's historical success is reassuring, but maintaining a diversified strategy can help mitigate future risks.

Projection Info

Monte Carlo simulations, which use historical data to project potential outcomes, suggest a promising future for this portfolio. With 1,000 simulations, the portfolio has an annualized return of 11.93%, and 984 simulations show positive returns. The simulations indicate a 5th percentile outcome of 33.5% and a 50th percentile of 319.3%, highlighting the range of possible results. While these projections offer valuable insights, they rely on historical data and assumptions that may not hold in the future. Continuously reviewing and adjusting your portfolio in response to changing market conditions can help optimize returns.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks, with 99% in equities and a mere 1% in cash. This allocation provides significant growth potential but increases exposure to market volatility. Compared to a typical balanced benchmark, this portfolio lacks fixed income or alternative assets, which can offer stability during market downturns. Introducing bonds or other asset classes could provide a buffer against market fluctuations and enhance diversification. This adjustment could help align the portfolio more closely with a balanced risk profile.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%
  • Basic Materials
    2%

Sector allocation is notably concentrated, with technology making up 29% of the portfolio, followed by financial services (15%) and healthcare (11%). This tech-heavy focus may lead to increased volatility, especially during interest rate hikes or tech sector downturns. While the sector composition aligns with current market trends, diversifying across more sectors could reduce risk. Consider balancing the sector allocation to mitigate potential overexposure to any single industry. A more even distribution can help cushion the portfolio against sector-specific risks.

Regions Info

  • North America
    93%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographic exposure is predominantly in North America, accounting for 93% of the portfolio. This heavy reliance on the US market offers benefits from a strong domestic economy but also exposes the portfolio to regional risks. The limited exposure to Europe, Asia, and other regions suggests potential under-diversification. Comparing this to global benchmarks, the portfolio could benefit from increased international diversification. Expanding geographic allocation can reduce reliance on any single market and improve resilience against regional economic downturns.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization allocation is primarily in mega (41%) and big-cap stocks (31%), with medium (19%), small (6%), and micro-cap (2%) stocks making up the remainder. This distribution offers stability and growth potential, as larger companies tend to be more resilient. However, small and micro-cap stocks can provide higher growth opportunities despite being riskier. Balancing market cap exposure by increasing small and micro-cap allocations could enhance growth potential and diversification. This approach can help capture gains from emerging companies while managing overall risk.

Redundant positions Info

  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio's assets, Vanguard Total Stock Market Index Fund ETF Shares and Vanguard Total World Stock Index Fund ETF Shares, are highly correlated, moving together in similar market conditions. While this alignment can boost returns during market upswings, it limits diversification benefits during downturns. Highly correlated assets may not provide the desired risk reduction in volatile markets. Consider incorporating less correlated assets to enhance diversification and risk management. This adjustment can help stabilize the portfolio during market fluctuations and improve resilience.

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's risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. However, the high correlation between the current ETFs limits diversification benefits. Before optimizing, consider reducing overlapping assets to improve diversification. This step can enhance the portfolio's efficiency and align it more closely with the investor's risk tolerance and goals. By focusing on diversification and efficient allocation, the portfolio can achieve a better balance of risk and return.

Dividends Info

  • Vanguard Total World Stock Index Fund ETF Shares 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Weighted yield (per year) 1.12%

The portfolio's dividend yield is modest, with a total yield of 1.12%. Vanguard Total World Stock Index Fund ETF Shares offers a higher yield (1.60%) compared to Vanguard Total Stock Market Index Fund ETF Shares (1.00%). Dividends can provide a steady income stream and contribute to total returns, especially in low-growth environments. For investors seeking income, exploring higher-yielding assets or dividend-focused strategies might be beneficial. Balancing growth and income can enhance the portfolio's overall performance and align with long-term financial goals.

Ongoing product costs Info

  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, with Vanguard Total Stock Market Index Fund ETF Shares at 0.03% and Vanguard Total World Stock Index Fund ETF Shares at 0.07%. Low costs are advantageous, as they contribute to better long-term returns by minimizing fees. Compared to industry averages, the portfolio's costs are well-managed, supporting efficient wealth accumulation. Maintaining a focus on cost-effective investments can enhance overall portfolio performance. Regularly reviewing and optimizing costs can further improve net returns over time.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey