Balanced and Highly Diversified Portfolio with Low Costs and Moderate Risk Suited for Long-Term Growth

Report created on Nov 13, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of three Vanguard ETFs, providing a mix of domestic and international equities and bonds. With 40% allocated to the Vanguard Total Stock Market Index Fund ETF and another 40% to the Vanguard Total International Stock Index Fund ETF, the portfolio captures a broad spectrum of global equities. The remaining 20% is invested in the Vanguard Total Bond Market Index Fund ETF, adding a layer of stability. This composition offers a balanced approach, blending growth potential with risk management, making it suitable for those seeking steady, long-term growth with moderate risk exposure.

Growth Info

The historical performance of the portfolio shows a respectable CAGR of 8.38%, indicating solid growth over time. However, the maximum drawdown of -29.0% highlights the potential for significant short-term losses, typical of equity-heavy portfolios. The fact that 90% of returns were made in just 26 days suggests a reliance on market timing, which can be risky. Understanding these dynamics is crucial for setting realistic expectations and maintaining composure during market volatility. The performance history suggests a well-rounded approach to balancing risk and return, aligning with a long-term investment strategy.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance was analyzed. With a hypothetical initial investment, the simulation projects a 50th percentile return of 147.36%, indicating a strong median outcome. The 5th percentile shows a potential loss of -5.71%, while the 67th percentile forecasts a 212.06% gain. This simulation helps visualize potential outcomes and their probabilities, offering a range of possibilities for future returns. While the annualized return of 7.51% is promising, it's essential to remain aware of the inherent uncertainties and maintain a diversified strategy to mitigate risks.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%

The portfolio's asset class allocation predominantly consists of stocks at 79.31%, with bonds making up 19.78%. This allocation reflects a growth-oriented strategy with a focus on capital appreciation. The small allocation to cash and other assets provides limited liquidity and diversification. Understanding the implications of this asset mix is crucial for managing risk and achieving investment goals. To maintain a balanced risk profile, consider periodically reviewing and adjusting the allocation to ensure alignment with long-term objectives and risk tolerance, particularly if market conditions or personal circumstances change.

Sectors Info

  • Technology
    18%
  • Financials
    14%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation within the portfolio is diverse, with technology (17.51%) and financial services (13.62%) being the largest sectors. This diversification across 11 sectors reduces exposure to sector-specific risks and enhances overall stability. However, the portfolio's reliance on technology could increase volatility during market downturns. It's important to understand how sector performance can impact overall returns and adjust allocations as needed to align with market trends and personal investment goals. Regularly reviewing sector exposure can help maintain a balanced portfolio that capitalizes on growth opportunities while managing risk.

Regions Info

  • North America
    43%
  • Europe Developed
    16%
  • Asia Emerging
    7%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (42.92%), followed by Europe Developed (15.57%) and Asia Emerging (6.57%). This global diversification provides exposure to various economic environments and reduces the risk associated with any single region. However, the concentration in North America may lead to overexposure to U.S. market fluctuations. Understanding the geographic allocation helps in managing currency and geopolitical risks. To enhance diversification, consider periodically reviewing geographic exposure and adjusting allocations to capitalize on growth opportunities in emerging markets or mitigate risks in more volatile regions.

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 optimization chart suggests that the current allocation is already close to the efficient frontier, balancing risk and return effectively. For those seeking higher returns, shifting towards a more equity-heavy allocation could increase potential gains but also raise risk levels. Conversely, increasing bond exposure may offer more stability and lower risk, albeit with reduced growth potential. Before making any changes, it's crucial to evaluate personal risk tolerance and investment goals. Focusing on maintaining diversification and cost efficiency is key to optimizing the portfolio's performance while aligning with long-term financial objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 2.38%

The portfolio's overall dividend yield stands at 2.38%, with the Vanguard Total Bond Market Index Fund ETF contributing a 3.5% yield. This provides a steady income stream, enhancing total returns and offering some protection during market downturns. The dividend yield can be an important factor for investors seeking regular income or reinvestment opportunities. To optimize income potential, consider periodically reviewing dividend yields and adjusting allocations to maintain a balance between growth and income, ensuring alignment with personal financial goals and income needs.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • 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) 0.05%

The portfolio's total expense ratio (TER) is an impressively low 0.05%, reflecting cost-efficient management. Vanguard's ETFs are known for their low fees, which can significantly impact long-term returns. By minimizing costs, the portfolio maximizes net returns, allowing more capital to compound over time. Understanding the importance of keeping investment costs low is crucial for enhancing overall performance. To maintain cost efficiency, consider regularly reviewing and comparing expense ratios across investment options, ensuring that the portfolio remains aligned with financial goals and delivers optimal value for money.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey