A globally diversified portfolio with balanced risk and low costs using a single ETF

Report created on Dec 22, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists entirely of the Vanguard Total World Stock Index Fund ETF, making it a concentrated bet on global equities. This single ETF provides exposure to a wide range of stocks across different regions and sectors, offering broad diversification. However, relying solely on one asset class, equities, may expose the portfolio to market volatility. A more diversified portfolio might include bonds or other asset classes to reduce risk and enhance stability. Consider whether this concentration aligns with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has delivered a solid CAGR of 10.32%, indicating strong growth over time. This performance is impressive, especially considering the global exposure, which helps mitigate regional downturns. However, it's important to note the significant max drawdown of -34.22%, which highlights potential volatility during market downturns. While past performance is a useful guide, it does not guarantee future results. Regularly reviewing performance against personal goals can ensure alignment with your risk tolerance.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a favorable outlook for the portfolio. With a median projected return of 262.71% and a high probability of positive returns, the portfolio appears well-positioned for growth. However, it's crucial to remember that these projections are based on past data and do not account for unexpected market events. Continual monitoring and adjustments in response to market changes can help maintain alignment with your investment objectives.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily weighted towards stocks, with 99.06% in equities. This focus on a single asset class provides potential for high returns but also increases exposure to market volatility. Diversification across multiple asset classes, such as bonds or real estate, could reduce risk and provide more stability. Evaluating your risk tolerance and investment goals can help determine if this equity-heavy approach is suitable for your needs.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio features a diverse sector allocation, with a notable emphasis on technology at 24.58%. This sector concentration can drive growth but may also introduce volatility, especially during economic shifts. The balanced exposure across other sectors like financial services and healthcare adds stability. Regularly reviewing sector weights and adjusting as needed can help ensure the portfolio remains aligned with market trends and personal risk preferences.

Regions Info

  • North America
    66%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, which accounts for 65.72% of the allocation. This concentration provides stability but may limit exposure to growth opportunities in emerging markets. Diversifying across regions can help mitigate regional risks and capture global growth potential. Assessing the geographic allocation in relation to your investment goals can guide potential adjustments for better diversification.

Dividends Info

  • Vanguard Total World Stock Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.20%

The portfolio's dividend yield stands at 1.2%, providing a modest income stream. Dividends can offer a cushion during market downturns and contribute to total returns. For investors seeking income, exploring higher-yielding assets or dividend-focused funds could enhance this aspect of the portfolio. Balancing growth and income needs is essential for aligning with long-term financial goals.

Ongoing product costs Info

  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.07%

The portfolio benefits from impressively low costs, with a total expense ratio of 0.07%. These minimal fees support better long-term performance by preserving more of your investment's growth. Keeping costs low is crucial for maximizing returns, especially over extended investment horizons. Regularly reviewing and comparing fees can help ensure cost efficiency remains a priority.

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