A broadly diversified portfolio with a focus on US equities and moderate dividend yield
Report created on Jan 16, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 55.00% -
VE Vanguard FTSE All-World ex-US Index Fund ETF Shares
VEU - US9220427754 20.00% -
VB Vanguard Small-Cap Value Index Fund ETF Shares
VBR - US9229086114 12.50% -
VY Vanguard High Dividend Yield Index Fund ETF Shares
VYM - US9219464065 12.50%
This portfolio consists of four ETFs, with a significant focus on the Vanguard S&P 500 ETF at 55%. The remainder is divided across the Vanguard FTSE All-World ex-US Index Fund (20%), Vanguard Small-Cap Value Index Fund (12.5%), and Vanguard High Dividend Yield Index Fund (12.5%). This composition leans heavily towards US large-cap equities, reflecting a common benchmark for balanced portfolios. The allocation provides a strong foundation for growth but could benefit from additional diversification into other asset classes to reduce reliance on equities alone.
Growth
The portfolio's historical performance boasts an impressive CAGR of 11.89%, indicating robust growth over time. However, it's important to consider the max drawdown of -35.1%, which highlights potential volatility during market downturns. This performance, compared to common benchmarks like the S&P 500, suggests competitive returns but with notable risk. While past performance is not a guarantee of future results, using this data can help set realistic expectations for long-term growth.
Projection
The Monte Carlo simulation, a method that uses historical data to estimate future outcomes, suggests a median potential growth of 274.31% over the investment horizon. This projection, based on 1,000 simulations, shows a high likelihood of positive returns, with 972 simulations ending positively. While these projections offer insights into potential outcomes, it's crucial to remember that they rely on historical data and cannot predict future events with certainty.
Asset classes
- Stocks 100%
The portfolio is heavily weighted towards stocks, with 99.56% in equities and minimal exposure to cash and other asset classes. This high equity concentration aligns with growth-oriented strategies but may increase vulnerability to market fluctuations. Diversification across different asset classes, such as bonds or real estate, could help mitigate risk and provide a more balanced risk-return profile, especially during periods of market volatility.
Sectors
- Technology 23%
- Financials 17%
- Industrials 11%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 7%
- Consumer Staples 7%
- Energy 5%
- Utilities 4%
- Basic Materials 3%
- Real Estate 3%
Sector allocation is led by technology (23.03%), followed by financial services (17.33%) and industrials (11.03%). This distribution mirrors typical market indexes, offering broad exposure across key sectors. However, the tech-heavy focus could introduce higher volatility, especially during economic shifts or interest rate changes. Balancing sector weights can help manage sector-specific risks and ensure steady performance across varying market conditions.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
The portfolio exhibits strong geographic concentration in North America (80.70%), with limited exposure to other regions. While this aligns with US market benchmarks, it may reduce diversification benefits and increase sensitivity to US market dynamics. Expanding geographic exposure, particularly in emerging markets, could enhance diversification and capture growth opportunities outside North America, balancing regional risks.
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 balance between risk and return for the given assets. Adjusting allocations within the current asset mix can enhance efficiency, potentially improving returns without increasing risk. This approach focuses on maximizing the portfolio's performance relative to its risk level, ensuring a strategic balance.
Dividends
- Vanguard Small-Cap Value Index Fund ETF Shares 1.40%
- Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.60%
- Vanguard S&P 500 ETF 1.20%
- Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
- Weighted yield (per year) 1.49%
The portfolio's dividend yield is 1.49%, with the Vanguard High Dividend Yield Index Fund contributing the highest yield at 2.7%. Dividends can provide a steady income stream and contribute to total returns, especially in low-growth environments. For investors seeking income, maintaining or increasing exposure to high-dividend assets could enhance cash flow without sacrificing growth potential.
Ongoing product costs
- Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
- Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
- Vanguard S&P 500 ETF 0.03%
- Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
- Weighted costs total (per year) 0.05%
Portfolio costs are impressively low, with a total expense ratio (TER) of 0.05%. This cost efficiency supports better long-term performance by minimizing the impact of fees on returns. Maintaining low costs is a key advantage, and continuous monitoring of fees ensures that the portfolio remains cost-effective, maximizing net returns over time.
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