A balanced and cautious investment portfolio with a focus on diversification and stability

Report created on Jun 14, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio shows a strategic balance between stocks (50%), bonds (40%), and commodities (10%), aimed at reducing volatility while providing growth potential. The significant allocation to the iShares Core U.S. Aggregate Bond ETF stabilizes the portfolio against market swings, while the Vanguard Total Stock Market Index Fund ETF Shares and Vanguard FTSE All-World ex-US Index Fund ETF Shares offer growth through diversified equity exposure. The inclusion of SPDR Gold Mini Shares adds a layer of protection against inflation and economic uncertainties. This composition reflects a cautious approach, prioritizing capital preservation with moderate growth.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 8.50%, with a maximum drawdown of -21.10%. This performance indicates a relatively stable growth trajectory, especially considering the portfolio's cautious risk profile. The days contributing most to returns highlight the impact of significant market movements on portfolio performance. Comparing this to benchmark indices can provide context, suggesting that this portfolio aims to smooth out volatility rather than capture every peak.

Projection Info

Monte Carlo simulations, which use historical data to forecast future performance under various scenarios, show a wide range of outcomes for this portfolio. With 980 out of 1,000 simulations predicting positive returns and a median projected annualized return of 10.40%, the portfolio demonstrates strong potential for growth while mitigating risk. However, it's important to remember that these projections are hypothetical and cannot guarantee future results.

Asset classes Info

  • Stocks
    50%
  • Bonds
    40%
  • Other
    10%
  • Cash
    1%

The allocation across asset classes in this portfolio is well-considered, balancing stock and bond investments with a minor allocation to commodities. This diversification is key to managing risk and achieving steady returns over time. Stocks provide growth potential, bonds offer stability and income, and commodities can serve as a hedge against inflation. Comparing these allocations to industry benchmarks, the portfolio is aligned with a cautious investment strategy, aiming for lower volatility and steady returns.

Sectors Info

  • Technology
    12%
  • Financials
    9%
  • Health Care
    5%
  • Industrials
    5%
  • Consumer Discretionary
    5%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The sectoral allocation reveals a diversified approach, with the largest exposures in technology, financial services, and healthcare. This diversification supports risk management, as different sectors react uniquely to economic changes. However, the technology sector's prominence could introduce volatility, given its sensitivity to market swings. Balancing sector exposures can further stabilize the portfolio, ensuring that no single sector disproportionately affects performance.

Regions Info

  • North America
    36%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America (36%), with lesser exposure to developed Europe (6%) and emerging Asian markets (2%). This distribution suggests a focus on more stable, developed markets, which aligns with the portfolio's cautious risk profile. However, increasing exposure to emerging markets could offer higher growth potential, albeit with increased risk. Balancing geographic exposure can enhance diversification and potentially improve returns over the long term.

Market capitalization Info

  • Mega-cap
    22%
  • Large-cap
    16%
  • Mid-cap
    9%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio's market capitalization breakdown—mega (22%), big (16%), medium (9%), small (2%), and micro (1%)—indicates a conservative approach, favoring larger, more established companies known for their stability and lower volatility. This strategy aligns with the portfolio's cautious risk classification but may limit exposure to the higher growth potential of smaller companies. Adjusting this allocation could introduce more growth opportunities, though it would also increase 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's current allocation suggests it is near the Efficient Frontier, where the risk-return trade-off is optimized. This means that, for its given level of risk, the portfolio is positioned to achieve the highest expected return. Adjustments can be made to further optimize this balance, but they should be considered carefully, keeping in mind the investor's risk tolerance and investment goals. Regular reviews and rebalancing are essential to maintaining this optimization over time.

Dividends Info

  • iShares Core U.S. Aggregate Bond ETF 3.80%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 2.40%

The portfolio's dividend yield stands at an overall 2.40%, with the bond ETF offering the highest yield at 3.80%. This income contributes to the portfolio's total return, providing a steady cash flow that can be reinvested or used as income. For a cautious investor, dividends can offer a buffer during market downturns, reinforcing the portfolio's stability-focused strategy. Balancing growth and income-generating investments is key to optimizing returns while managing risk.

Ongoing product costs Info

  • iShares Core U.S. Aggregate Bond ETF 0.03%
  • SPDR Gold Mini Shares 0.10%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

With a total Expense Ratio (TER) of 0.04%, this portfolio is highly cost-efficient, enhancing long-term returns by minimizing fees. Low costs are crucial for a cautious investment strategy, where the goal is steady, risk-adjusted returns rather than high-risk, high-reward outcomes. Keeping costs low ensures that more of the portfolio's returns are retained by the investor, a fundamental principle of successful long-term investing.

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