A balanced and broadly diversified portfolio with a strong focus on stocks and low costs

Report created on Jun 16, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 80% in a total stock market ETF and 15% in an international stock ETF, complemented by a 5% allocation in bonds. This composition reflects a balanced approach, aiming to capture the growth potential of the stock market while maintaining a degree of stability through bonds. The heavy tilt towards stocks suggests an emphasis on long-term growth, leveraging the broad diversification across sectors and geographies provided by the chosen ETFs. This setup aligns well with a balanced risk profile, seeking to mitigate volatility through diversification without compromising on growth potential.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 11.92%, with a maximum drawdown of -33.58%. These figures suggest a resilient performance, capable of recovering from market downturns and delivering strong returns over time. The days contributing to 90% of returns emphasize the importance of staying invested, as significant gains often come from a relatively small number of days. Comparing this performance to benchmarks would likely show a competitive edge, especially given the low cost structure of the ETFs involved.

Projection Info

Forward projections, based on Monte Carlo simulations, indicate a wide range of potential outcomes, from a 5th percentile loss of 5.0% to a 67th percentile gain of 223.3%. These projections underscore the inherent uncertainty in investing but also highlight the significant upside potential. It's important to remember that Monte Carlo simulations use historical data to forecast future returns, which means they cannot predict unforeseen market shifts or crises. Investors should view these projections as one of many tools in making informed decisions.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio's asset class distribution, with 94% in stocks and 5% in bonds, is indicative of a growth-oriented strategy with a moderate risk appetite. This allocation is well-suited to investors with a long-term horizon, who can withstand short-term market fluctuations in exchange for higher potential returns. The minimal bond allocation provides some income and acts as a buffer during stock market volatility, but the heavy emphasis on stocks drives the portfolio's performance and risk profile.

Sectors Info

  • Technology
    25%
  • Financials
    15%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    3%

Sector allocation covers a broad spectrum, with technology (25%) and financial services (15%) being the most prominent. This sectoral spread reflects the current market composition, where technology plays a significant role in driving innovation and growth. However, the concentration in technology also introduces sector-specific risks, such as regulatory changes or market saturation. Diversification across other sectors like healthcare, consumer cyclicals, and industrials helps mitigate this risk, ensuring the portfolio is not overly dependent on any single economic driver.

Regions Info

  • North America
    81%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America (81%), with smaller allocations across developed Europe, emerging Asia, and other regions. This distribution suggests a focus on the stability and growth potential of the US market, while still capturing some diversification benefits from international exposure. However, the limited exposure to emerging markets and other regions may mean missing out on higher growth opportunities available in those areas. Investors might consider increasing international diversification to balance risks and capture global growth trends.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    29%
  • Mid-cap
    18%
  • Small-cap
    6%
  • Micro-cap
    2%

The market capitalization breakdown shows a preference for larger companies, with 40% in mega-cap and 29% in large-cap stocks. This focus on larger, more established companies typically offers stability and resilience compared to smaller companies. However, the relatively smaller allocation to mid, small, and micro-cap stocks may limit potential for outsized gains that these segments can offer. Balancing this with a slightly increased allocation to smaller caps could enhance growth potential while maintaining an acceptable level of risk.

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.

Regarding risk vs. return optimization, this portfolio appears well-positioned on the Efficient Frontier, indicating a favorable balance between expected returns and risk level. However, there's always room for improvement. Regularly reviewing the asset allocation and diversification strategy can ensure the portfolio continues to align with the investor's goals and risk tolerance. Adjustments may be necessary to adapt to changing market conditions or shifts in the investor's financial situation or objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.65%

Dividend yields from the ETFs contribute to the portfolio's overall return, with a total yield of 1.65%. This income stream, while modest, offers a cushion during market downturns and contributes to compounding over time. The bond ETF's higher yield (3.80%) provides a steady income component, balancing the lower yields from the stock ETFs. For investors seeking both growth and income, this dividend strategy supports long-term wealth accumulation without heavily relying on capital gains alone.

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 costs are impressively low, with a Total Expense Ratio (TER) of just 0.03%. This cost efficiency is crucial for long-term investment success, as lower costs directly translate to higher net returns for the investor. The choice of low-cost Vanguard ETFs demonstrates a strategic approach to minimizing expenses, ensuring that more of the portfolio's returns are retained by the investor. Continuously monitoring and managing investment costs remains a key component of effective portfolio management.

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