A broadly diversified portfolio with a focus on US equities and moderate international exposure

Report created on Dec 8, 2024

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.

Positions

The portfolio is heavily weighted towards equities, with 80% in the Vanguard Total Stock Market Index Fund ETF and 20% in the Vanguard Total International Stock Index Fund ETF. This composition indicates a strong preference for stocks, which can offer higher returns but also come with increased volatility. The minimal allocation to cash and other asset classes suggests a focus on capital appreciation over income or preservation. To diversify risk, consider adding different asset classes like bonds or real estate investment trusts (REITs) which can provide stability during market downturns.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 12.56%. This suggests a strong historical performance, though past performance does not guarantee future results. The maximum drawdown of -34.73% highlights the potential volatility and risk, especially during market downturns. To mitigate this, consider strategies like dollar-cost averaging, which spreads investments over time and reduces the impact of market fluctuations on the overall portfolio.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, suggests a range of future returns. With 1,000 simulations, the median (50th percentile) outcome is a 274.36% portfolio increase, while the 5th percentile shows a more conservative 26.79% increase. While these projections offer a glimpse into potential futures, they are not guarantees. Consider using these insights to assess whether the portfolio aligns with your risk tolerance and financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash and other categories. This heavy stock allocation can lead to higher returns over the long term but also increases exposure to market volatility. Diversifying into other asset classes, such as bonds or commodities, could help balance risk and provide more consistent returns. Consider your investment horizon and risk tolerance when deciding whether to adjust this allocation.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is well-balanced, with significant exposure to technology, financial services, and healthcare. This diversification across sectors can help mitigate sector-specific risks and capitalize on different economic cycles. However, a 27% allocation to technology indicates a potential concentration risk. To manage this, consider reducing exposure to sectors that may be overrepresented and increasing allocations to underrepresented sectors for a more balanced approach.

Regions Info

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

The portfolio's geographic exposure is predominantly in North America, accounting for over 81% of assets. This concentration might limit exposure to growth opportunities in other regions. While North American markets have historically been strong, consider diversifying geographically to include more emerging markets, which can offer growth potential and reduce regional risk. This can help protect against economic downturns in any one region.

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 could potentially be optimized using the Efficient Frontier, which focuses on achieving the best possible risk-return ratio. By adjusting the allocation between the current assets, you might improve the portfolio's efficiency. This doesn't necessarily mean adding new assets but rather reallocating between existing ones to achieve a more favorable risk-return profile. Regularly reviewing and rebalancing your portfolio can help maintain alignment with your financial goals.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.54%

The portfolio’s total dividend yield is 1.54%, with the international ETF providing a slightly higher yield. Dividends can provide a steady income stream and help cushion against market volatility. Reinvesting dividends can also enhance long-term returns through compounding. If income is a priority, consider increasing exposure to high-dividend stocks or funds. However, be mindful of the trade-off between yield and growth potential.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio’s total expense ratio (TER) is a low 0.04%, reflecting the cost-efficiency of the chosen ETFs. Low costs are crucial for maximizing net returns over time, as high fees can erode gains. Regularly reviewing and minimizing investment costs can significantly impact long-term performance. Consider exploring other low-cost investment options or negotiating fees with your financial advisor to optimize cost efficiency.

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