A cautious multi factor portfolio blending quality bonds with small cap value and global diversification

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

Cautious Investors

This setup fits someone with a cautious‑but‑growth‑oriented mindset: not willing to ride out massive drawdowns, but also not content to sit entirely in cash or short‑term bonds. The ideal horizon is long‑term—think 10 years and beyond—so the small cap value tilts and global equity exposure have time to pay off. Goals might include building retirement wealth, preserving purchasing power against inflation, and maintaining reasonable income without chasing high‑yield risks. Risk tolerance is moderate: okay with temporary declines in the 15–25% range but focused on avoiding catastrophic losses. A patient, rules‑based personality that can stick to a plan through normal market noise is a particularly good fit.

Positions

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares
    VGIT - US92206C7065
    40.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    15.00%
  • BNY Mellon International Equity ETF
    BKIE - US09661T4040
    15.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    10.00%

This portfolio leans 60% toward stocks and 40% toward high‑quality bonds, which lines up nicely with a cautious profile. The large 40% slice in intermediate Treasuries is a strong stabilizer, while the stock side mixes broad market exposure with small cap value and international holdings. Compared with a typical cautious benchmark, this is a bit more tilted to smaller and cheaper companies, which can add long‑term return potential but also extra bumps along the way. Keeping this 60/40 split as a baseline and only making slow, deliberate tweaks around the edges can help maintain your current balance between growth and downside protection.

Growth Info

Historically, this mix has delivered a 12.4% compound annual growth rate (CAGR), meaning $10,000 growing steadily like a “smooth average speed” would have become about $32,000 over 10 years. The maximum drawdown of about ‑21% shows that in a rough period, that $10,000 could have temporarily fallen close to $7,900 before recovering. That’s relatively mild compared with all‑stock portfolios, and for a cautious risk score of 3/7, this is quite strong. Still, past performance is not a promise; markets change. Using this history mainly as a rough guide, not a guarantee, helps keep expectations realistic.

Projection Info

The Monte Carlo simulation ran 1,000 possible futures by remixing past returns in many random paths to stress‑test what might happen. It shows a 5th percentile outcome of about 173% of starting value and a median (50th percentile) over 700%, with very few simulations losing money. Monte Carlo is basically a “what if?” engine: it doesn’t predict the future but shows a range of possible roads if markets behave roughly like they have. Because it relies on historical patterns, it can underestimate very unusual events. Treat these numbers as a probability map, not a promise, and use them to frame best‑, base‑, and worst‑case planning.

Asset classes Info

  • Stocks
    60%
  • Bonds
    40%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

With 60% in stocks and 40% in bonds, the high‑level asset split is classic cautious‑to‑moderate and aligns well with many retirement‑style benchmarks. The 40% in Treasuries acts like a shock absorber, often rising or holding steady when stocks fall, which helps soften drawdowns. The 60% equity slice keeps growth potential strong so the portfolio isn’t just treading water against inflation. This allocation is well‑balanced and aligns closely with global standards for a lower‑risk growth approach. Any future changes would mainly be about nudging the stock/bond split up or down as time horizon, income needs, or comfort with volatility evolve.

Sectors Info

  • Financials
    13%
  • Industrials
    11%
  • Consumer Discretionary
    9%
  • Technology
    7%
  • Basic Materials
    6%
  • Energy
    5%
  • Health Care
    4%
  • Consumer Staples
    3%
  • Telecommunications
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector exposure is broad: financials, industrials, and consumer cyclicals lead, with meaningful slices in tech, materials, energy, and smaller allocations in defensive areas. This kind of spread is close to many global equity benchmarks, which is a strong indicator of diversification. One nuance: small cap value tilts often mean more exposure to cyclical and economically sensitive sectors, which can shine in recoveries but feel choppy in recessions or rate shocks. Because the sector mix is not wildly off‑benchmark, it works well alongside your substantial Treasury position. Keeping this diversified sector profile while avoiding big single‑sector bets helps retain a smoother, benchmark‑like risk pattern.

Regions Info

  • North America
    33%
  • Europe Developed
    14%
  • Japan
    8%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Asia Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Europe Emerging
    0%

Geographically, about a third of the portfolio is in North America, with solid developed‑market exposure in Europe and Japan plus smaller allocations to other regions. That’s a bit more globally balanced than many US‑centric investors, which is a positive: foreign markets can lead for long stretches, and currency differences can sometimes cushion local shocks. The lack of emerging market exposure reduces certain political and currency risks but also skips some higher‑growth regions. This balance suits a cautious stance: strong tilt to developed markets, less to riskier areas. Over time, modestly adjusting the foreign share—without big swings—can keep global diversification aligned with comfort levels.

Market capitalization Info

  • Small-cap
    16%
  • Mid-cap
    12%
  • Mega-cap
    12%
  • Micro-cap
    11%
  • Large-cap
    8%

The market‑cap mix is unusually tilted: meaningful exposure to small (16%) and micro (11%) companies, with moderate stakes in mega and big caps. This is different from typical benchmarks, which are usually dominated by mega and large caps. Smaller value‑oriented stocks historically have offered higher expected returns but also sharper ups and downs, especially in crises or liquidity squeezes. Pairing that factor tilt with a hefty Treasury allocation is a clever way to keep overall risk in check. If volatility ever feels too high, dialing back the small and micro slice—not necessarily removing it—could reduce bumps while still keeping some of that long‑term return edge.

Dividends Info

  • Avantis® International Small Cap Value ETF 2.80%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • BNY Mellon International Equity ETF 3.00%
  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Weighted yield (per year) 2.80%

The overall yield of about 2.8% comes from a blend of stock dividends and bond interest, with Treasuries and international equity ETFs doing a lot of the heavy lifting. For a cautious investor, that’s a nice balance: enough income to matter, but still leaving plenty of room for growth from price appreciation. Dividends and interest help soften the psychological impact of volatility because you’re getting paid while you wait. Just remember yields move with rates and market prices, so they’re not guaranteed and can go up or down. Using this yield primarily as a supplement, not your only return driver, keeps expectations sensible.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • BNY Mellon International Equity ETF 0.04%
  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.13%

Your total expense ratio (TER) of about 0.13% is impressively low, especially given the use of more specialized small cap value strategies. In plain English, you’re keeping most of what the market gives you instead of handing it to fund companies each year. Costs compound just like returns, so shaving even a fraction of a percent can mean thousands more over decades. This aligns strongly with best practices: broad, low‑cost core funds plus selective use of slightly higher‑cost factor ETFs where they add something distinct. Keeping this overall fee level low while periodically checking for cheaper but equivalent options supports better long‑term performance.

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.

On a risk‑return chart, this portfolio likely sits in a pretty efficient spot, given its mix of stabilizing bonds and higher‑expected‑return small cap value stocks. The Efficient Frontier is just the set of portfolios that offer the best possible return for each level of risk using the same ingredients. Based on your current lineup, small tweaks in weights—like gently adjusting the small value or Treasury share—could nudge you closer to that frontier without changing what you hold. “Efficiency” here only means getting the most expected return per unit of volatility; it doesn’t automatically reflect other goals like income needs, taxes, or personal comfort.

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