Balanced and cautious portfolio with a strong foundation in diversified index funds

Report created on May 26, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is structured around three core Vanguard index funds, allocating 44% to a total stock market fund, 33% to a total bond market fund, and 23% to an international stock fund. This composition reflects a cautious yet growth-oriented strategy, aiming to balance the volatility of the stock market with the stability of bonds. The high diversification across asset classes and global markets is commendable, aligning well with best practices for investors seeking a mix of growth and income with moderate risk.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 7.77%, with a maximum drawdown of -25.35%. This performance suggests resilience during market downturns, a crucial factor for cautious investors. The days contributing most to returns highlight the importance of being invested during key market movements. Compared to benchmarks, this historical performance indicates a well-executed balance between risk and return, suitable for its risk profile.

Projection Info

Monte Carlo simulations project a median potential growth of 128.7% over the simulation period, with a 93.6% chance of positive returns. This forward-looking analysis, while based on historical data, suggests a strong likelihood of future growth, albeit with inherent uncertainties. Investors should understand that such projections are hypothetical and actual outcomes may vary, emphasizing the importance of regular portfolio reviews.

Asset classes Info

  • Stocks
    66%
  • Bonds
    33%
  • Cash
    1%

With 66% in stocks and 33% in bonds, the portfolio's asset class allocation supports its cautious profile. This balance provides growth potential through equities while using bonds to mitigate volatility and preserve capital. The 1% cash allocation allows for flexibility and liquidity. This asset mix is well-suited for investors seeking moderate growth with reduced risk exposure.

Sectors Info

  • Technology
    16%
  • Financials
    12%
  • Industrials
    7%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector distribution, led by technology and financial services, aligns with the broader market's composition. However, the balanced exposure across industrials, consumer cyclicals, healthcare, and other sectors mitigates the risk of overconcentration. This sectoral diversification is crucial for smoothing returns over time, though investors should periodically review sector weights to ensure alignment with their risk tolerance and market outlook.

Regions Info

  • North America
    46%
  • No data
    33%
  • Europe Developed
    9%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic allocation emphasizes North America and diversifies into developed European markets, emerging Asia, and other regions. This global exposure enhances the portfolio's growth potential and spreads risk across different economic cycles. However, the significant portion labeled as "unknown" warrants clarification, likely representing the broad nature of the international fund. Ensuring geographical diversification aligns with the investor's risk appetite and global economic trends is essential.

Market capitalization Info

  • Mega-cap
    28%
  • Large-cap
    20%
  • Mid-cap
    12%
  • Small-cap
    4%
  • Micro-cap
    1%

The market capitalization breakdown, with a focus on mega and big-cap stocks, supports stability and growth. These companies typically offer more resilience during market fluctuations. However, the smaller allocations to medium, small, and micro-cap stocks provide potential for higher growth, albeit with increased volatility. This cap-size diversification is a strategic approach to balancing risk and reward within the equity component.

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.

Considering the Efficient Frontier, this portfolio appears well-positioned for its risk score of 3 out of 7, suggesting an optimal balance between risk and return with its current allocation. However, investors should regularly assess whether the portfolio's risk-return profile aligns with their evolving financial goals and market conditions. Adjustments may be necessary to maintain this optimization over time.

Dividends Info

  • Vanguard Total Bond Market Index Fund Admiral Shares 3.80%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 2.90%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 1.30%
  • Weighted yield (per year) 2.49%

The portfolio's overall dividend yield of 2.49% contributes to its income generation, complementing capital gains for total return. The bond fund's higher yield reflects its role in providing steady income, while the stock funds' yields offer growth potential plus income. For investors prioritizing income, reviewing and possibly rebalancing towards higher-yielding assets within the risk tolerance could enhance income streams.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund Admiral Shares 0.04%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.09%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 0.04%
  • Weighted costs total (per year) 0.05%

With a total expense ratio (TER) of 0.05%, the portfolio benefits from Vanguard's low-cost index funds, supporting higher net returns over the long term. Lower costs are a crucial factor in maximizing investment growth, especially in a cautious strategy where preserving capital and minimizing expenses are priorities. Continually monitoring fund costs remains important, ensuring they remain competitive.

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