A balanced and broadly diversified portfolio with a strong focus on global equities

Report created on May 7, 2025

Risk profile Info

4/7
Balanced
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Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

This portfolio is structured around three Vanguard ETFs, with a heavy emphasis on the S&P 500 ETF, making up 60% of the allocation. The remaining 40% is split between developed markets and small-cap stocks outside the U.S. This composition reflects a strategic focus on stock market investments, leveraging the stability and growth potential of large-cap companies, while also seeking diversification and growth opportunities in international and small-cap markets.

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.70%, with a significant maximum drawdown of -34.43%. These figures suggest a resilient performance over time, albeit with periods of considerable volatility. The days contributing most to returns highlight the impact of short-term gains, underscoring the importance of staying invested through market cycles for long-term growth.

Projection Info

Monte Carlo simulations, which forecast future portfolio performance based on historical data, indicate a wide range of outcomes. The median projection suggests a potential increase of 176.1%, with a 9.12% annualized return across all simulations. While encouraging, it's crucial to remember that these projections are hypothetical and subject to market changes, emphasizing the need for ongoing portfolio review and adjustment.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's almost exclusive focus on stocks (99%) with minimal cash holdings (1%) aligns with a growth-oriented strategy but comes with higher volatility. This asset class distribution supports long-term capital appreciation but may not suit those requiring regular income or with a lower risk tolerance. Diversifying across different asset classes could provide a buffer during stock market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    17%
  • Industrials
    12%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is well-diversified, with technology and financial services leading but no overwhelming concentration in any one sector. This balanced sector exposure helps mitigate risks associated with sector-specific downturns. However, the heavy weighting towards technology, a sector known for its volatility, could influence overall portfolio risk and performance.

Regions Info

  • North America
    64%
  • Europe Developed
    19%
  • Japan
    8%
  • Asia Developed
    3%
  • Australasia
    2%
  • Asia Emerging
    2%
  • Africa/Middle East
    1%

Geographic allocation underscores a strong bias towards North American markets, complemented by significant exposure to developed European countries and Japan. While this provides a solid foundation in stable economies, the minimal exposure to emerging markets and specific regions like Latin America and Africa/Middle East may limit growth potential from these high-growth areas.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    30%
  • Mid-cap
    21%
  • Small-cap
    5%

The portfolio's emphasis on mega and big-cap stocks aligns with its balanced risk profile, offering stability and potential for growth. However, the limited exposure to small and micro-cap stocks could mean missing out on higher growth opportunities these segments can offer, albeit with increased risk.

Redundant positions Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares
    High correlation

The high correlation between the Vanguard FTSE Developed Markets and Vanguard FTSE All-World ex-US Small-Cap ETFs indicates redundancy, limiting the diversification benefits. Diversification aims to spread risk across uncorrelated assets, suggesting a review of these holdings could enhance portfolio efficiency.

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 current portfolio could be optimized by addressing the high correlation between certain assets, which doesn't add diversification value. Reallocating funds from overlapping investments to less correlated assets could improve the risk-return profile, moving the portfolio closer to the Efficient Frontier, where the highest possible return is achieved for a given level of risk.

Dividends Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.90%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 2.03%

With a total yield of 2.03%, the portfolio offers a modest income stream, primarily from the developed markets and small-cap ETFs. This dividend yield, while contributing to total returns, may not meet the needs of those seeking higher income, suggesting a potential area for adjustment depending on income goals.

Ongoing product costs Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from low total expense ratios (TER), averaging 0.04%, which is advantageous for long-term growth. Lower costs mean more of the investment returns are retained by the investor, a critical factor in building wealth over time.

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