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A balanced portfolio with global diversification and a focus on long-term growth

Report created on Jan 20, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is heavily invested in equities, with 89% allocated to stocks and 10% to bonds. The Vanguard Total Stock Market Index Fund makes up 45% of the portfolio, providing broad exposure to U.S. equities. The rest is diversified across emerging markets, developed markets, and small-cap value funds. A 10% allocation to long-term treasuries adds a layer of stability. This composition aligns well with a balanced risk profile. Maintaining a diversified mix of funds is crucial for managing risk and capturing growth opportunities across different markets.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.11%, which is commendable for a balanced portfolio. The maximum drawdown of -31.67% indicates potential volatility during market downturns. This performance suggests resilience and potential for growth, but it also highlights the importance of risk management. Comparing this with benchmark indices can provide further insights into relative performance. Regularly reviewing performance against benchmarks helps in understanding the portfolio's strengths and areas for improvement.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows a wide range of potential returns. With a 50th percentile projection of 116.4% and a 67th percentile at 191.1%, the portfolio has a positive outlook. However, the 5th percentile indicates a potential loss of -33.9%. These projections underscore the uncertainty inherent in investing. While past performance and simulations provide useful insights, they are not guarantees. It's crucial to remain adaptable and make adjustments as needed based on changing market conditions.

Asset classes Info

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

The allocation across asset classes is predominantly in stocks, with a small allocation to bonds. This stock-heavy approach is typical for those seeking growth, but it may expose the portfolio to higher volatility. The bond allocation, primarily in long-term treasuries, offers some balance and income potential. Comparing asset class weights to typical benchmarks shows alignment with a growth-oriented strategy. To enhance diversification, consider periodically reviewing the balance between stocks and bonds, ensuring it aligns with evolving risk tolerance and financial goals.

Sectors Info

  • Technology
    20%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diverse, with technology (20%) and financial services (17%) being the largest sectors. This distribution is similar to many global benchmarks, indicating a balanced approach. However, a tech-heavy allocation could lead to increased volatility during periods of rising interest rates. Regularly assessing sector trends and potential impacts on the portfolio can help in making informed adjustments. It's important to maintain sector diversity to mitigate risks associated with sector-specific downturns and capitalize on growth opportunities across different industries.

Regions Info

  • North America
    57%
  • Europe Developed
    11%
  • No data
    10%
  • Asia Emerging
    9%
  • Japan
    5%
  • Asia Developed
    4%
  • Africa/Middle East
    2%
  • Australasia
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (57%), with significant exposure to Europe and Asia. This allocation provides a good level of global diversification, though it leans towards developed markets. Emerging markets comprise a smaller portion, which may limit potential growth opportunities. Comparing geographic exposure to global benchmarks can help identify any over- or under-exposures. Consider whether this geographic balance aligns with your investment goals, and make adjustments if necessary to manage regional risks and opportunities effectively.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    23%
  • Mid-cap
    17%
  • Small-cap
    12%
  • Micro-cap
    5%

The portfolio is well-diversified across market capitalizations, with a tilt towards mega-cap (32%) and big-cap stocks (23%). This provides stability and growth potential, but the inclusion of small (12%) and micro-cap (5%) stocks adds an element of higher risk and potential reward. This mix aligns with a balanced approach, offering exposure to both established companies and growth opportunities. Regularly reviewing market cap exposure ensures that the portfolio remains aligned with your risk tolerance and investment goals, particularly as market dynamics change.

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.

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The portfolio could potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This involves adjusting allocations to maximize returns for a given level of risk. By analyzing the portfolio's positioning on the Efficient Frontier, you can identify opportunities for improvement. Regularly reviewing and rebalancing the portfolio ensures it remains aligned with your risk tolerance and financial goals, maximizing the potential for achieving desired outcomes.

Dividends Info

  • U.S. SMALL CAP VALUE PORTFOLIO U.S. SMALL CAP VALUE PORTFOLIO - INSTITUTIONAL CLASS 1.10%
  • DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO - INSTITUTIONAL CLASS 2.30%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES 0.60%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 1.80%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND INVESTOR SHARES 0.80%
  • VANGUARD LONG-TERM TREASURY FUND INVESTOR SHARES 3.70%
  • Weighted yield (per year) 1.32%

The portfolio's dividend yield stands at 1.32%, with contributions mainly from the Vanguard Long-Term Treasury Fund and international small-cap value funds. Dividends provide a steady income stream, which can be particularly appealing for income-focused investors. While not the primary focus of this growth-oriented portfolio, dividends add an element of stability. It's important to consider the role of dividends in your overall strategy, especially if income generation becomes a priority. Reinvesting dividends can also enhance the compounding effect over time.

Ongoing product costs Info

  • U.S. SMALL CAP VALUE PORTFOLIO U.S. SMALL CAP VALUE PORTFOLIO - INSTITUTIONAL CLASS 0.31%
  • DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO DFA INTERNATIONAL SMALL CAP VALUE PORTFOLIO - INSTITUTIONAL CLASS 0.43%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES 0.29%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 0.08%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND INVESTOR SHARES 0.14%
  • VANGUARD LONG-TERM TREASURY FUND INVESTOR SHARES 0.20%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, which is quite low. This efficient cost structure supports better long-term returns by minimizing the drag on performance. Lower costs are a significant advantage, as they allow more of your investment returns to be retained. Regularly reviewing fund expenses and exploring cost-effective alternatives can further enhance portfolio efficiency. Maintaining a focus on minimizing costs while ensuring quality fund selection is crucial for optimizing long-term investment outcomes.

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