A broadly diversified portfolio with a strong focus on US equities and low costs

Report created on Apr 18, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of two ETFs: Vanguard Total Stock Market Index Fund ETF Shares (80%) and Vanguard Total International Stock Index Fund ETF Shares (20%). This structure emphasizes broad diversification across global equities, with a significant tilt towards the US market. Compared to a typical balanced portfolio, this allocation leans heavily towards equities, enhancing growth potential but also increasing exposure to market volatility. It's crucial to consider whether this allocation aligns with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 10.90%, showcasing strong performance over time. This figure indicates the average annual growth rate of the investment, akin to a car's average speed on a road trip. However, the portfolio also experienced a maximum drawdown of -34.77%, highlighting its vulnerability during market downturns. When compared to benchmarks, this performance suggests a solid growth trajectory but underscores the importance of preparing for potential volatility.

Projection Info

The Monte Carlo simulation, using 1,000 iterations, projects a range of potential future outcomes based on historical data. It shows a median return of 191.8%, indicating a strong growth potential. However, the 5th percentile projects a possible decline of -11.0%, emphasizing the inherent uncertainty of future returns. While these simulations provide a broad range of expected outcomes, they rely on past data and cannot predict market changes with certainty. It's essential to use these projections as a guide, not a guarantee.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks (99%), with a minimal cash holding (1%). This concentration in equities can drive higher returns over the long term but also exposes the portfolio to increased volatility. Compared to a diversified benchmark, the lack of fixed income or alternative assets may limit downside protection during market downturns. Consider whether introducing other asset classes could enhance risk-adjusted returns without compromising growth objectives.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation reveals a significant concentration in technology (27%), followed by financial services (16%) and consumer cyclicals (11%). This tech-heavy focus aligns with recent market trends but may lead to increased volatility during economic shifts or interest rate changes. Compared to common benchmarks, this sector distribution suggests a strong growth orientation. Regularly reviewing sector exposures can help maintain balance and mitigate sector-specific risks.

Regions Info

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

Geographically, the portfolio is heavily weighted towards North America (81%), with limited exposure to other regions. This concentration reflects a home-country bias, common among US investors, but may limit diversification benefits. While the strong US market performance has been advantageous, broadening geographic exposure, particularly in emerging markets, could reduce potential risks associated with regional downturns. Consider whether a more globally diversified approach aligns with your investment goals.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization is predominantly in mega-cap (42%) and big-cap (30%) stocks, with smaller allocations to medium (19%) and small-cap (6%) stocks. This distribution suggests a preference for stability and established companies, which can offer reliable growth. However, smaller-cap stocks often provide higher growth potential and diversification. Balancing market cap exposure could enhance overall portfolio performance while managing risk.

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 appears to be well-positioned on the Efficient Frontier, indicating an optimal risk-return balance based on current asset allocation. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. While this optimization is beneficial, it's crucial to regularly review and adjust the portfolio to ensure it remains aligned with your evolving risk tolerance and investment goals.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.76%

The portfolio's dividend yield stands at 1.76%, with the Vanguard Total International Stock Index Fund ETF Shares contributing a higher yield of 3.20%. Dividends provide a steady income stream and can enhance total returns, especially during periods of market volatility. For growth-focused investors, reinvesting dividends can compound returns over time. Ensure that the dividend strategy aligns with your income needs and long-term objectives.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.03%

With a Total Expense Ratio (TER) of 0.03%, the portfolio boasts impressively low costs. This cost efficiency supports better long-term performance by preserving more of your returns. Compared to industry averages, these low fees are a significant advantage, allowing for more capital to compound over time. Maintaining a focus on minimizing costs can further enhance portfolio growth.

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