Balanced portfolio with strong diversification and moderate risk suitable for long-term growth

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 seeking balanced growth with moderate risk tolerance and a medium to long-term horizon. It prioritizes diversification across asset classes and regions, making it ideal for individuals looking to build wealth steadily while managing risk. The blend of equities and bonds provides a mix of growth potential and income stability, appealing to those who value a well-rounded investment approach.

Positions

  • VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES
    VIIIX - US9220402096
    40.96%
  • Vanguard Total Bond Market Index Fund Institutional Shares
    VBTIX - US9219375048
    19.99%
  • VANGUARD INTERNATIONAL GROWTH FUND ADMIRAL SHARES
    VWILX - US9219105015
    13.01%
  • VANGUARD SMALL-CAP VALUE INDEX FUND INSTITUTIONAL SHARES
    VSIIX - US9229087856
    10.23%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    7.11%
  • Schwab International Small-Cap Equity ETF
    SCHC - US8085248883
    3.39%
  • iShares Core MSCI Emerging Markets ETF
    IEMG - US46434G1031
    2.69%
  • iShares MSCI Pacific ex Japan ETF
    EPP - US4642866655
    0.94%
  • iShares Micro-Cap ETF
    IWC - US4642888691
    0.87%
  • iShares MSCI United Kingdom ETF
    EWU - US46435G3341
    0.23%
  • iShares MSCI Eurozone ETF
    EZU - US4642866085
    0.23%
  • iShares MSCI Japan ETF
    EWJ - US46434G8226
    0.22%
  • SPDR® S&P Emerging Markets Small Cap ETF
    EWX - US78463X7562
    0.10%
  • VanEck Indonesia Index ETF
    IDX - US92189F8335
    0.04%

The portfolio is well-structured, with a dominant allocation to two Vanguard funds: the Institutional Index Fund (40.96%) and the Total Bond Market Index Fund (19.99%). This setup provides a solid foundation of U.S. equity and fixed income exposure. The remaining portfolio is diversified across various international funds and ETFs, reflecting a balanced approach. Compared to a typical balanced benchmark, this portfolio aligns well with its 80% equity and 20% bond allocation. For further optimization, consider evaluating whether the current weightings align with your specific investment goals and risk tolerance.

Growth Info

The historical performance showcases a CAGR of 8.52%, which is commendable for a balanced portfolio. This return indicates a solid growth trajectory over time. However, the maximum drawdown of -29.09% suggests that the portfolio has experienced significant declines during market downturns. Comparing this to benchmarks, the performance is competitive, though the drawdown highlights potential volatility. To manage this, consider strategies to mitigate risk, such as diversifying further or rebalancing periodically to maintain desired risk levels.

Projection Info

Using Monte Carlo simulations, which predict potential outcomes by analyzing historical data, the portfolio shows a median projected return of 100.3%. While 807 out of 1,000 simulations yielded positive returns, it's essential to remember that past data may not predict future results. With a 5th percentile outcome of -46.3%, there's a risk of significant loss in adverse scenarios. To prepare for such possibilities, consider stress-testing the portfolio under various market conditions and adjusting allocations to align with your risk tolerance.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%
  • Other
    0%
  • Not Classified
    0%
  • No data
    0%

The asset allocation consists of 79% stocks, 20% bonds, and 1% cash, aligning with a balanced investment strategy. This distribution provides a solid mix of growth potential and income stability. Compared to benchmark norms, the portfolio is well-aligned, offering a diversified exposure across major asset classes. To enhance diversification, consider reviewing the cash allocation and ensuring it meets liquidity needs without compromising growth opportunities.

Sectors Info

  • Technology
    20%
  • Financials
    12%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Consumer Discretionary
    2%

The sector allocation is diverse, with a notable 20% in technology and significant exposure to financial services and industrials. This composition mirrors common benchmarks, suggesting a balanced approach. However, tech-heavy portfolios may experience higher volatility during interest rate hikes. Given the current economic climate, consider monitoring sector trends and adjusting allocations to maintain a balance between growth and stability.

Regions Info

  • North America
    56%
  • Unknown
    20%
  • Europe Developed
    11%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Japan
    3%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America (56%), with notable exposure to Europe Developed (11%) and Asia Emerging (4%). This distribution offers a solid mix of developed and emerging markets, providing diversification across regions. However, the 20% unknown allocation could limit precise geographic analysis. To optimize geographic diversification, consider evaluating regional exposures and ensuring alignment with global benchmarks.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    21%
  • Mid-cap
    15%
  • Small-cap
    8%
  • Micro-cap
    2%

The portfolio's market capitalization exposure is primarily in mega (32%) and big (21%) stocks, which typically offer stability and lower volatility. With medium (15%) and small (8%) allocations, there's a balanced exposure to growth opportunities. This composition aligns well with diversified benchmarks. To further enhance diversification, consider reviewing micro-cap (2%) exposure and ensuring it aligns with your risk tolerance and growth objectives.

Redundant positions Info

  • Schwab International Small-Cap Equity ETF
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, such as the Schwab International Small-Cap Equity ETF and Vanguard Total International Stock Index Fund ETF Shares. High correlation means these assets tend to move together, limiting diversification benefits during downturns. To optimize risk management, consider reducing overlapping assets and introducing less correlated investments to enhance diversification and resilience.

Dividends Info

  • iShares MSCI Pacific ex Japan ETF 1.60%
  • iShares MSCI Japan ETF 2.20%
  • iShares MSCI United Kingdom ETF 3.80%
  • SPDR® S&P Emerging Markets Small Cap ETF 2.90%
  • iShares MSCI Eurozone ETF 2.50%
  • iShares Core MSCI Emerging Markets ETF 3.00%
  • iShares Micro-Cap ETF 0.90%
  • Schwab International Small-Cap Equity ETF 3.50%
  • Vanguard Total Bond Market Index Fund Institutional Shares 2.80%
  • VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES 1.00%
  • VANGUARD SMALL-CAP VALUE INDEX FUND INSTITUTIONAL SHARES 1.00%
  • VANGUARD INTERNATIONAL GROWTH FUND ADMIRAL SHARES 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.63%

The portfolio's dividend yield is 1.63%, with notable contributions from the iShares MSCI United Kingdom ETF (3.80%) and Schwab International Small-Cap Equity ETF (3.50%). Dividends provide a steady income stream, especially in volatile markets. For those seeking income growth, consider focusing on funds with higher yields and evaluating whether the current yield aligns with your income goals.

Ongoing product costs Info

  • iShares MSCI Pacific ex Japan ETF 0.48%
  • iShares MSCI Japan ETF 0.50%
  • iShares MSCI United Kingdom ETF 0.50%
  • SPDR® S&P Emerging Markets Small Cap ETF 0.65%
  • iShares MSCI Eurozone ETF 0.51%
  • VanEck Indonesia Index ETF 0.57%
  • iShares Core MSCI Emerging Markets ETF 0.09%
  • iShares Micro-Cap ETF 0.60%
  • Schwab International Small-Cap Equity ETF 0.11%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.02%

The portfolio's total expense ratio (TER) is impressively low at 0.02%, supporting better long-term performance. However, some ETFs, like the SPDR® S&P Emerging Markets Small Cap ETF (0.65%), have higher costs. Lowering expenses can enhance returns, so consider reviewing high-cost assets and exploring lower-cost alternatives to improve cost efficiency without sacrificing diversification.

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, which identifies the best risk-return ratio based on current assets. By adjusting allocations, the portfolio could achieve a higher return for the same level of risk. This optimization focuses on maximizing the efficiency of existing assets rather than introducing new ones. Consider rebalancing to align with the Efficient Frontier for improved performance.

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