Balanced and Highly Diversified Portfolio with Moderate Risk and Strong Geographic and Sector Allocation

Report created on Jul 14, 2024

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 composed of six ETFs, with a significant portion allocated to the Vanguard Total Stock Market Index Fund ETF Shares at 35%. This allocation indicates a strong inclination towards broad U.S. stock market exposure. The Vanguard Total International Stock Index Fund ETF Shares and Avantis® International Small Cap Value ETF add international diversification, while the Vanguard Total Bond Market Index Fund ETF Shares provide fixed income stability. The Invesco NASDAQ 100 ETF adds a tech-heavy growth component, and the Vanguard Real Estate Index Fund ETF Shares offer exposure to real estate. This diversified composition balances growth potential with risk mitigation across various asset classes.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 10.98%, which is impressive. However, it has experienced a maximum drawdown of -26.88%, reflecting its exposure to market volatility. The fact that 90% of returns are concentrated in just 16 days suggests that timing and market conditions play a significant role in performance. This historical performance underscores the potential for substantial growth but also highlights the importance of being prepared for market fluctuations. Maintaining a long-term perspective and not overreacting to short-term volatility can be beneficial.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected with a hypothetical initial investment. The simulation indicates a median return of 246.03% and an annualized return of 10.52%, with 971 simulations showing positive returns. This suggests a favorable outlook, although the range of outcomes highlights the inherent uncertainty in investing. The Monte Carlo simulation provides a probabilistic forecast, emphasizing the importance of diversification and risk management. Continuing to monitor and adjust the portfolio as needed will help in navigating potential market changes.

Asset classes Info

  • Stocks
    79%
  • Real Estate
    10%
  • Bonds
    10%
  • Cash
    1%

The portfolio is well-diversified across asset classes, with approximately 79.42% in stocks, 10% in real estate, and 9.89% in bonds. This allocation reflects a balanced approach, with a significant emphasis on equities for growth, complemented by real estate and fixed income for stability. The presence of cash and other minor asset classes adds liquidity and flexibility. This asset allocation aligns with a moderate risk tolerance, providing a mix of growth and income potential. Regularly reviewing the asset class distribution can ensure alignment with financial goals and risk appetite.

Sectors Info

  • Technology
    20%
  • Real Estate
    12%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Energy
    4%
  • Utilities
    2%

The portfolio's sector allocation is broad, with technology, real estate, and financial services being the top three sectors. This diverse sector exposure helps mitigate risk by spreading investments across different economic areas. Technology, at 19.50%, offers growth potential, while real estate and financial services provide stability and income. The inclusion of consumer cyclicals, industrials, and healthcare further enhances diversification. This sector allocation supports a balanced investment strategy, allowing for participation in various market trends. Periodic assessment of sector performance can aid in maintaining an optimal balance.

Regions Info

  • North America
    58%
  • Europe Developed
    14%
  • Japan
    7%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, accounting for 57.68% of the allocation. This focus on North America provides exposure to a stable and mature market. However, the portfolio also includes significant investments in Europe Developed, Japan, and Asia Emerging, enhancing global diversification. This geographic spread helps mitigate regional risk and taps into growth opportunities across different markets. The allocation reflects a balanced approach to capturing global economic growth. Continuously monitoring geopolitical developments and economic trends can inform future geographic adjustments.

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 by adjusting the asset allocation along the efficient frontier. To achieve a riskier portfolio, consider increasing equity exposure, while a more conservative approach would involve a higher allocation to bonds. Given the current balanced state, focus first on maintaining diversification and managing sector and geographic allocations. Regular optimization reviews can ensure alignment with changing financial goals and risk tolerance. By balancing risk and return, the portfolio can be positioned for optimal performance over time.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.30%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Real Estate Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 2.24%

The portfolio offers a total dividend yield of 2.24%, with the Vanguard Real Estate Index Fund ETF Shares and Vanguard Total Bond Market Index Fund ETF Shares providing the highest yields at 3.7% and 3.3%, respectively. This dividend income adds a layer of stability and regular cash flow, complementing the growth potential of the equity investments. Dividends can be reinvested to compound returns or used to meet income needs. Keeping an eye on dividend sustainability and yield changes can help optimize income generation within the portfolio.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • 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) 0.10%

The portfolio maintains a low total expense ratio (TER) of 0.1%, indicating cost-efficiency. The Vanguard Total Bond Market Index Fund ETF Shares and Vanguard Total Stock Market Index Fund ETF Shares have the lowest expense ratios, contributing to overall cost savings. Managing investment costs is crucial, as high fees can erode returns over time. The low TER reflects a commitment to cost-effective investing, allowing more of the portfolio's returns to be retained. Continuously seeking opportunities to minimize costs can enhance long-term performance.

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