A balanced portfolio with strong diversification and low costs for long-term growth

Report created on Apr 16, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of three ETFs: 70% in a total stock market index fund, 20% in an international stock index fund, and 10% in a bond market index fund. This composition reflects a balanced approach, with a strong tilt toward equities. Compared to a typical balanced benchmark, the portfolio leans more heavily on equities, which can enhance growth potential but also increase volatility. To maintain alignment with your risk tolerance, consider periodically reviewing the equity allocation, especially during significant market shifts.

Growth Info

The portfolio's historical performance, with a CAGR of 9.97%, demonstrates solid growth over time. This is impressive, considering a max drawdown of -32.25%, which highlights periods of significant volatility. Benchmarking against similar portfolios, this performance aligns well, offering reassurance of its competitiveness. However, remember that past performance doesn't guarantee future results. Regularly evaluating performance against personal goals and market conditions is crucial for staying on track.

Projection Info

The Monte Carlo simulation, using historical data, projects a range of potential outcomes for the portfolio. With 1,000 simulations, the median (50th percentile) suggests a 117.7% increase, while the 5th percentile indicates a potential -13.2% loss. This highlights the inherent uncertainty of investing. While simulations provide useful insights, they are not predictions. Regularly revisiting your investment strategy in light of personal circumstances and market changes is advisable.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio is primarily allocated to stocks (89%) and bonds (10%), with a small cash component (1%). This allocation aligns well with a balanced investment approach, offering growth potential from equities and stability from bonds. Compared to a typical balanced benchmark, the allocation is slightly more equity-heavy. If market conditions change or personal risk tolerance shifts, consider adjusting the bond allocation to enhance stability.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation shows a notable concentration in technology (24%), followed by financial services (15%) and consumer cyclicals (10%). This mirrors common benchmarks but with a heavier tech emphasis, which can lead to higher volatility, especially during tech market downturns. To manage risk, periodically review sector weights and consider diversifying into underrepresented sectors if market trends suggest potential growth opportunities.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted toward North America (71%), with limited exposure to other regions. While this aligns with many U.S.-centric benchmarks, it may limit diversification benefits. Consider increasing exposure to emerging markets or underrepresented regions to enhance diversification and potentially tap into higher growth areas. This could help mitigate risks associated with U.S. market downturns.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    27%
  • Mid-cap
    17%
  • Small-cap
    5%
  • Micro-cap
    2%

Market capitalization is tilted toward mega (38%) and big (27%) companies, which can provide stability and lower volatility. However, the smaller allocation to medium (17%), small (5%), and micro (2%) caps suggests limited exposure to potentially higher-growth opportunities. To balance risk and return, consider gradually increasing exposure to smaller-cap stocks if your risk tolerance allows.

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 can be optimized using the Efficient Frontier to improve the risk-return ratio. This involves adjusting asset weights to achieve the best possible return for a given level of risk. While this optimization focuses on current assets, it doesn't guarantee diversification or other goals. Regularly reviewing and rebalancing the portfolio can help maintain optimal efficiency and alignment with your investment objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.96%

The portfolio's dividend yield of 1.96% contributes to overall returns, with the bond ETF yielding 3.40% and the international stock ETF at 3.20%. Dividends can provide a steady income stream, which is beneficial for reinvestment or income generation. While dividends are not the primary focus here, they enhance total returns. Periodically reviewing dividend yields can help maintain a balance between growth and income.

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 0.05%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) of 0.03% is impressively low, supporting better long-term performance by minimizing costs. This aligns with best practices for cost-efficient investing. Low costs enhance compounding returns over time, making this portfolio well-suited for cost-conscious investors. Regularly monitoring expense ratios ensures that costs remain competitive and aligned with your investment strategy.

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