A balanced portfolio with strong U.S. focus and moderate international diversification

Report created on Apr 11, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of stock, bond, and other asset classes, with a significant 47% allocation to the Vanguard S&P 500 ETF. This reflects a strong emphasis on U.S. large-cap equities. The remaining allocation is spread across international equities, gold, and bonds, creating a moderately diversified structure. Compared to a typical balanced benchmark, this portfolio leans heavily into equities, particularly U.S. stocks, which can drive growth but also increase volatility. Consider reviewing this composition to ensure it aligns with your risk tolerance and long-term goals.

Growth Info

Historically, the portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 9.09%, which is commendable for a balanced strategy. However, it has experienced a maximum drawdown of -27.33%, indicating vulnerability during market downturns. Compared to benchmarks, this performance suggests a strong growth potential but with notable risk during volatile periods. It's crucial to assess whether this level of risk aligns with your financial objectives, especially if capital preservation is a priority during downturns.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio's projected outcomes vary widely. With a median projection of 130% growth and a 5th percentile indicating a possible -10% loss, the range of potential returns reflects both opportunity and risk. While 923 out of 1,000 simulations show positive returns, it's important to remember that these projections are not guarantees. They serve as a guide, emphasizing the need for regular portfolio reviews to adapt to changing market conditions.

Asset classes Info

  • Stocks
    68%
  • Bonds
    20%
  • Other
    11%
  • Cash
    1%

The portfolio's asset class allocation includes 68% in stocks, 20% in bonds, and 11% in alternative assets like gold. This mix offers a moderate level of diversification, balancing growth potential with stability. Compared to typical balanced portfolios, the allocation is slightly equity-heavy, which can enhance returns but may also increase risk. To optimize diversification, consider adjusting the bond and alternative asset allocations to manage volatility and enhance resilience in various market conditions.

Sectors Info

  • Technology
    19%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diverse, with a 19% concentration in technology, followed by financial services and consumer cyclicals. This distribution aligns well with market benchmarks, offering exposure to both growth and defensive sectors. However, the tech-heavy allocation may lead to increased volatility, especially during interest rate hikes. To mitigate sector-specific risks, consider periodically rebalancing the portfolio to maintain a balanced sector exposure that aligns with your risk tolerance.

Regions Info

  • North America
    58%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio is predominantly U.S.-focused, with 58% allocated to North American assets. This concentration may limit global diversification, exposing the portfolio to regional risks. While developed markets in Europe and Asia are represented, emerging markets are underweighted. To enhance geographic diversification and reduce reliance on U.S. markets, consider increasing exposure to international and emerging markets, which can provide growth opportunities and hedge against U.S. market downturns.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    21%
  • Mid-cap
    14%
  • No data
    11%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is skewed towards mega and big caps, making up 48% of the total allocation. This focus on larger companies can provide stability and lower risk compared to smaller caps. However, the limited exposure to small and micro caps may restrict growth potential. To capture the benefits of diversification across company sizes, consider increasing the allocation to smaller companies, which can offer higher growth prospects albeit with increased volatility.

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 risk-return profile can potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting the current asset allocations, you might achieve a more efficient portfolio, balancing risk and return more effectively. However, it's important to note that optimization is based on historical data and assumptions, and may not account for future market changes. Regular reviews and adjustments are recommended.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 3.80%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Extended Market Index Fund ETF Shares 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.87%

The portfolio's dividend yield stands at 1.87%, providing a modest income stream. This yield is primarily driven by bond holdings, which offer higher yields than equities. While dividends can enhance total returns, they are not the primary focus of this growth-oriented portfolio. If income generation is a priority, consider increasing allocations to higher-yielding assets, such as dividend-focused equities or income-generating bonds, to balance growth with income.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • SPDR® Gold Shares 0.40%
  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, reflecting cost-efficient fund choices. Low costs are crucial for long-term performance, as they minimize the drag on returns. This aligns well with best practices in portfolio management, ensuring more of your investment returns are retained. Continue to monitor and manage costs, potentially seeking further reductions by exploring other low-cost investment options, to enhance net returns over time.

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