A broadly diversified balanced portfolio with a focus on U.S. equities and moderate risk exposure

Report created on Dec 7, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of two ETFs: 80% in a U.S. total stock market ETF and 20% in an international stock market ETF. This structure provides a broad exposure to both domestic and international equities, making it a well-rounded choice for those seeking diversification. The emphasis on U.S. stocks suggests a focus on stable, mature markets, while the international component adds a layer of global exposure. A balanced portfolio like this can help mitigate risks associated with concentrating investments in a single market, offering a blend of growth potential and risk management.

Growth Info

Historically, this portfolio has shown a compound annual growth rate (CAGR) of 12.59%, indicating strong performance over time. However, it's important to note the maximum drawdown of -34.73%, which highlights the potential for significant losses during market downturns. Past performance is not a guarantee of future results, but it provides a snapshot of how the portfolio has reacted to market conditions. Investors should be prepared for volatility and consider their ability to withstand such drawdowns when evaluating this portfolio's suitability for their investment goals.

Projection Info

Using Monte Carlo simulation, this portfolio's future performance was projected through 1,000 simulations, offering a range of possible outcomes. The median projection suggests a 242.49% growth, while the worst-case scenario predicts a 15.03% increase. Monte Carlo simulations use historical data to estimate potential future returns, but they are not foolproof. They provide a probabilistic outlook rather than a definitive prediction. Investors should use these projections as a guide to understanding potential risks and returns, rather than as a precise forecast of future performance.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is heavily skewed towards equities, accounting for over 99% of the total. This high concentration in stocks suggests a focus on growth rather than income or capital preservation. While equities offer the potential for substantial returns, they also come with increased volatility and risk. Diversifying into other asset classes, such as bonds or real estate, could help reduce overall portfolio risk and smooth out returns over time. Investors should assess their risk tolerance and consider whether this equity-heavy allocation aligns with their financial goals.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation within this portfolio is diverse, with significant exposure to technology (27.22%), financial services (14.85%), and healthcare (11.06%). This broad sectoral coverage helps mitigate risks associated with individual industries. However, the concentration in technology may increase vulnerability to sector-specific downturns. Balancing sector exposure can enhance diversification and reduce the impact of sector-specific risks. Investors should periodically review sector allocations and adjust them to align with their risk tolerance and market outlook.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 81.18% of assets allocated to this region. While this provides stability through exposure to developed markets, it limits exposure to potentially high-growth emerging markets. A more balanced geographic allocation could enhance diversification and provide access to diverse economic growth opportunities. Investors should consider their comfort with geographic risk and adjust their allocations to ensure they are not overly reliant on a single region's economic 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.

Click on the colored dots to explore allocations.

The Efficient Frontier concept suggests that this portfolio could be optimized to achieve a better risk-return ratio. By adjusting the allocation between the existing assets, investors can potentially enhance returns without increasing risk. Optimization does not guarantee higher returns, but it aims to achieve the best possible balance between risk and reward based on historical data. Investors should consider consulting with a financial advisor to explore optimization strategies and ensure that their portfolio aligns with their risk tolerance and investment objectives.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.54%

This portfolio offers a modest dividend yield of 1.54%, with the U.S. stock ETF yielding 1.2% and the international ETF yielding 2.9%. Dividends can provide a steady income stream, which can be particularly appealing to income-focused investors. While the yield is not exceptionally high, it contributes to total returns and can help offset some market volatility. Investors seeking higher income may consider reallocating a portion of the portfolio to dividend-focused investments, balancing the need for income with growth potential.

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 total expense ratio (TER) is low at 0.04%, reflecting the cost-efficiency of the Vanguard ETFs. Low costs are crucial for maximizing long-term returns, as they reduce the drag on performance. Over time, even small differences in expense ratios can significantly impact the portfolio's value. Investors should prioritize cost-effective investment options and regularly review their portfolios to ensure that expenses remain competitive. Maintaining a focus on low-cost investments can enhance the portfolio's overall return potential.

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