A broadly diversified portfolio with focus on US equities and low costs

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 with a moderate risk tolerance seeking balanced growth through equity exposure. The focus on US and international equities aligns with long-term wealth-building goals, while low costs support efficient investing. Ideal for individuals comfortable with market fluctuations, this portfolio offers potential for capital appreciation with a long-term horizon. Diversification across sectors and geographies provides a solid foundation for growth, suitable for those looking to enhance their financial future.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    70.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    30.00%

The portfolio holds two ETFs: Vanguard Total Stock Market Index Fund ETF Shares at 70% and Vanguard Total International Stock Index Fund ETF Shares at 30%. This structure emphasizes US equities while including international exposure. Compared to a typical balanced benchmark, the portfolio has a higher concentration in equities, which may amplify growth potential. However, it lacks fixed income, which could stabilize returns. Consider adding bonds or other asset classes for further diversification and risk mitigation, especially if seeking lower volatility.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 11.39%, reflecting strong past performance. This growth rate indicates how the portfolio has increased in value over time, akin to a car's average speed on a journey. The max drawdown of -34.61% highlights periods of significant decline, underscoring the risks of equity-heavy portfolios. While past performance is no guarantee of future results, these figures align well with benchmark returns, suggesting a robust historical performance.

Projection Info

Using a Monte Carlo simulation with 1,000 trials, the portfolio's future potential was assessed. This method uses historical data to project a range of possible outcomes, like predicting weather patterns. The 50th percentile shows a potential 237.6% return, indicating median expectations. While 969 simulations resulted in positive returns, it's crucial to remember that simulations rely on past data, which may not predict future market conditions accurately. Regularly reviewing the portfolio's alignment with your risk tolerance is advisable.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted in stocks at 99%, with a minimal 1% in cash. This allocation provides significant growth potential but also increases exposure to market volatility. Compared to balanced benchmarks, this portfolio lacks diversification across asset classes, which could buffer against market downturns. Introducing fixed income or alternative investments could enhance stability and align with the balanced risk classification, potentially smoothing returns over time.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation shows a strong emphasis on technology at 26%, followed by financial services at 16%. This concentration aligns with broader market trends but could increase volatility, especially in tech-heavy periods. A well-diversified sector allocation typically mirrors benchmark indices, spreading risk across various economic areas. Consider monitoring sector weights to ensure they align with your risk tolerance and investment goals, potentially rebalancing to avoid overexposure to any single sector.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily skewed towards North America at 72%, with limited exposure to emerging markets. While this aligns with US-centric benchmarks, it may miss opportunities for growth in underrepresented regions. A more globally diversified portfolio could reduce regional risk and capture growth in emerging economies. Consider adjusting geographic exposure to balance the US focus with international opportunities, potentially enhancing long-term returns and risk management.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

Market capitalization is diversified, with 42% in mega-cap stocks and 31% in big-cap stocks. This exposure to large, established companies provides stability and potential for steady growth. However, the 6% allocation to small-cap stocks offers limited exposure to higher growth potential but riskier investments. Balancing market cap exposure can enhance diversification, capturing both stability from large caps and growth from smaller companies. Consider adjusting weights to align with your investment strategy and risk tolerance.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.87%

The portfolio's dividend yield is 1.87%, with the Vanguard Total International Stock Index Fund ETF Shares contributing a higher yield of 3.20%. Dividends provide a steady income stream, which can be reinvested for compound growth. For investors seeking income, this yield offers a modest supplement to capital appreciation. Consider evaluating dividend reinvestment options or exploring higher-yielding investments if income generation is a priority, balancing growth and income goals.

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 costs are impressively low, with a total expense ratio (TER) of 0.04%. Low costs are crucial for long-term performance, as they minimize the drag on returns. Vanguard's reputation for cost-effective funds supports this portfolio's efficiency. Maintaining low costs should remain a priority, as even small savings can compound significantly over time. Continue to monitor expense ratios and consider cost-effective alternatives if they align with your investment strategy.

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.

The portfolio can be optimized using the Efficient Frontier concept, which seeks the best risk-return tradeoff. This optimization focuses on adjusting current asset weights to enhance returns without increasing risk. While the portfolio's diversification is strong, exploring slight reallocations among existing holdings could improve efficiency. Regular rebalancing and reviewing asset performance can help maintain an optimal portfolio aligned with evolving market conditions and personal goals.

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