Balanced portfolio with a strong foundation in US equities and diversified international exposure

Report created on Aug 5, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor looking for a balanced approach to growth and income, with a moderate risk tolerance and a long-term investment horizon. It's designed for those who seek steady returns with the potential for capital appreciation, while still maintaining a level of risk management through diversification across asset classes, sectors, and geographies. The mix of large-cap, dividend-yielding, and international investments makes it ideal for individuals aiming to build wealth over time, with a keen eye on managing volatility.

Positions

This portfolio is anchored by a 50% allocation to a Fidelity 500 Index Fund, ensuring a solid base in large-cap US equities. The inclusion of a 20% stake in the Vanguard Total International Stock Index Fund ETF broadens its reach globally, while the 15% Schwab U.S. Dividend Equity ETF adds an income component. The Fidelity Small Cap Index Fund and iShares California Muni Bond ETF, at 10% and 5% respectively, introduce elements of growth potential and tax-efficient income, rounding out a well-diversified portfolio. This structure aligns with the balanced risk profile, aiming for growth while managing risk through diversification across asset classes and geographies.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 11.60% and a maximum drawdown of -33.46%, the portfolio shows robust growth potential tempered by significant volatility. The days contributing to 90% of returns being concentrated in just 27.0 instances highlight the impact of short-term gains and the importance of staying invested through market cycles. This performance should be balanced against the risk score of 4 out of 7, indicating a moderate risk tolerance. Comparing this to benchmark indices could provide further context on performance relative to market movements.

Projection Info

The Monte Carlo simulation, with 1,000 runs, suggests a wide range of outcomes but leans positively, with 951 simulations forecasting growth. The median 50th percentile outcome projects a 205.6% increase, signifying potential for substantial growth. However, the 5th percentile at just 0.6% growth cautions against over-optimism, underscoring the inherent uncertainties in market investments. This forecast, while informative, should be considered alongside other factors, given its reliance on historical data which may not predict future performance accurately.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio's composition of 94% stocks and 5% bonds, with a minimal cash holding, is geared towards growth. This high stock allocation is typical for a balanced but growth-oriented investor, aiming for higher returns at the expense of increased volatility. The presence of bonds, albeit small, offers a cushion against market downturns, providing income and reducing overall portfolio volatility. Adjusting the stock-to-bond ratio could further tailor the portfolio to match the investor's risk tolerance and investment horizon more closely.

Sectors Info

  • Technology
    22%
  • Financials
    15%
  • Health Care
    11%
  • Industrials
    10%
  • Consumer Staples
    7%
  • Telecommunications
    7%
  • Consumer Discretionary
    6%
  • Energy
    6%
  • Consumer Discretionary
    4%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

With technology, financial services, and healthcare sectors leading the allocation, the portfolio is positioned to capitalize on growth trends in these areas. However, this concentration also exposes it to sector-specific risks, such as regulatory changes or economic cycles affecting these industries disproportionately. Diversification across more sectors or rebalancing to reduce concentration in any single sector could mitigate these risks, ensuring the portfolio is less vulnerable to single-sector downturns.

Regions Info

  • North America
    76%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation, with a 76% emphasis on North America and diversified exposure across developed and emerging markets, supports a balance between stability and growth. The underrepresentation of emerging markets, however, may limit exposure to high-growth opportunities outside the developed world. Considering a slight increase in emerging markets exposure could enhance growth prospects while introducing additional volatility and risk.

Market capitalization Info

  • Large-cap
    32%
  • Mega-cap
    32%
  • Mid-cap
    17%
  • Small-cap
    7%
  • Micro-cap
    5%

The portfolio's balanced approach between big, mega, and medium market capitalizations suggests a strategy aimed at capturing growth across the spectrum of company sizes while maintaining a degree of stability offered by larger companies. The allocation to small and micro-cap stocks, although limited, introduces higher growth potential but with increased risk. A periodic review of this distribution can ensure it remains aligned with the investor's risk tolerance and market outlook.

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 allocation demonstrates a thoughtful balance between risk and return, potentially near the Efficient Frontier, which represents the optimal risk-return ratio for a given set of assets. However, continuous assessment and slight adjustments could further optimize this balance. Incorporating different asset classes or alternative investments might offer improved diversification and risk-adjusted returns, aligning the portfolio even closer to the investor's specific goals and risk tolerance.

Dividends Info

  • iShares California Muni Bond ETF 2.70%
  • FIDELITY SMALL CAP INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.90%
  • Fidelity 500 Index Fund 0.90%
  • Schwab U.S. Dividend Equity ETF 3.90%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.82%

The dividend yield of the portfolio, averaging 1.82%, contributes to its total return, providing a steady income stream alongside capital appreciation. The Schwab U.S. Dividend Equity ETF, with the highest yield, underscores the portfolio's income-generating capability. For investors prioritizing income, further increasing the allocation to high-dividend-yielding assets could enhance this aspect, though it's important to balance yield-seeking with growth and risk considerations.

Ongoing product costs Info

  • iShares California Muni Bond ETF 0.08%
  • FIDELITY SMALL CAP INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • Fidelity 500 Index Fund 0.02%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

With an overall portfolio expense ratio of 0.04%, the costs are impressively low, supporting better long-term performance by minimizing the drag on returns. This cost efficiency is crucial for maximizing compounding growth over time. Continual monitoring of fund expenses and considering even lower-cost alternatives for similar strategies can ensure costs remain a minimal factor in portfolio performance.

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