A broadly diversified portfolio with strong US focus and low-cost ETFs

Report created on Dec 21, 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 is heavily weighted towards the Vanguard S&P 500 ETF, comprising 70% of the total allocation. This focus on large-cap US stocks offers stability and growth potential. The remaining 30% is split between the Vanguard Small-Cap Index Fund ETF and the Vanguard Total International Stock Index Fund ETF, providing exposure to smaller companies and international markets. This composition aligns with a balanced investment strategy, offering growth while maintaining diversification. Consider rebalancing periodically to maintain this strategic allocation and prevent any unintentional drift due to market movements.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.32%, significantly outperforming many benchmarks. However, it experienced a maximum drawdown of -35.04%, indicating vulnerability during market downturns. This highlights the potential for significant losses during volatile periods. While past performance is not indicative of future results, this historical data suggests the portfolio has been effective in capturing market gains. Monitoring the portfolio's performance against benchmarks can help ensure it continues to meet your investment goals.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future performance, suggests an annualized return of 10.87% across 1,000 simulations. This tool estimates potential outcomes, but remember that past data can't guarantee future results. The simulation shows a high likelihood of positive returns, with the 5th percentile at 2.84% and the median at 245.86%. It’s important to view these projections as potential scenarios rather than predictions. Regularly reviewing these projections can help adjust expectations and strategies as needed.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily invested in equities, with 99.47% in stocks, providing significant growth potential but also higher volatility. Minimal cash and other asset allocations offer limited downside protection during market downturns. This equity-heavy allocation aligns with a growth-focused strategy but may expose the portfolio to market swings. Diversifying into other asset classes, such as bonds or real estate, could reduce risk and add stability, especially during turbulent market periods.

Sectors Info

  • Technology
    27%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    3%

Sector allocation is well-distributed, with notable emphasis on technology at 27.44%, which could drive growth but also increase volatility. Other significant sectors include financial services, consumer cyclicals, and healthcare. This diversified sector exposure mirrors common benchmark distributions, which can help mitigate sector-specific risks. However, a tech-heavy portfolio may be sensitive to interest rate changes or regulatory shifts. Regularly reviewing sector weights can help maintain alignment with your risk tolerance and market outlook.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly North American at 85.61%, with limited exposure to other regions. This concentration provides familiarity and stability but may limit benefits from global diversification. Notable underrepresentation in emerging markets could forego potential high-growth opportunities. Expanding geographic exposure can enhance diversification and reduce reliance on the US market. Consider increasing allocations to regions with different economic cycles to balance risk and reward.

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 portfolio aligns closely with the Efficient Frontier, suggesting it offers an optimal risk-return balance given its current assets. This means the portfolio is well-structured to achieve the best possible returns for its level of risk. However, optimization is based solely on existing assets and does not consider adding new ones. Regularly reviewing the portfolio's position relative to the Efficient Frontier can help maintain this optimal balance over time.

Dividends Info

  • Vanguard Small-Cap Index Fund ETF Shares 0.90%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.00%

The portfolio's total dividend yield is 1.0%, with contributions from each ETF. While dividends provide a steady income stream, the yield is modest, reflecting the growth-oriented nature of the portfolio. Dividends can be reinvested to compound returns over time. If income generation is a priority, consider increasing exposure to higher-yielding assets. Regularly reviewing dividend policies and yields can ensure they align with your financial goals.

Ongoing product costs Info

  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.04%. This cost efficiency supports better long-term performance by minimizing fees that can erode returns. Low-cost ETFs like those in the portfolio are advantageous for maintaining more of the investment's growth. Continuously monitoring and comparing costs with other options can ensure the portfolio remains cost-effective, maximizing net returns.

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