A balanced portfolio with strong US focus and efficient cost structure

Report created on Mar 10, 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 composed of two ETFs: Vanguard S&P 500 ETF at 80% and Vanguard Total International Stock Index Fund ETF at 20%. This structure leans heavily toward US equities, which may align well with a US-based investor's familiarity and confidence in domestic markets. A balanced portfolio like this offers a stable foundation, yet it may benefit from additional diversification to reduce reliance on US market performance. Consider exploring other asset classes, such as bonds or real estate, to enhance diversification and potentially reduce volatility.

Growth Info

With a historical CAGR of 12.40%, the portfolio has shown strong performance, outperforming many benchmarks. However, it experienced a maximum drawdown of -33.92%, indicating vulnerability during market downturns. Such drawdowns are common in equity-heavy portfolios, emphasizing the importance of diversification. While past performance is no guarantee of future results, maintaining awareness of historical trends can guide future adjustments. Consider incorporating assets with lower volatility to buffer against downturns while maintaining growth potential.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a median return of 243.1%. This method offers a range of potential outcomes, highlighting the uncertainty inherent in investing. The simulations show a high likelihood of positive returns, with 974 out of 1,000 simulations yielding gains. While promising, these projections are not guarantees. They underscore the importance of a long-term investment horizon, allowing time to weather market fluctuations and capitalize on compounding growth.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is primarily allocated to stocks, with 99% in equities and 1% in cash. This concentration in equities may offer significant growth potential but also exposes the portfolio to higher volatility. A more balanced allocation could involve diversifying into fixed income or alternative investments, which may provide stability and income during market downturns. Aligning asset class allocation with long-term goals and risk tolerance is crucial for achieving desired outcomes.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is tech-heavy at 30%, followed by financial services at 15%. While technology has been a strong performer, its volatility can lead to significant swings in portfolio value. This sector concentration could amplify returns but also increase risk, especially during interest rate hikes or regulatory changes. A more balanced sector allocation can mitigate these risks and enhance stability. Consider diversifying into sectors with lower correlations to technology for a smoother performance trajectory.

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 heavily weighted toward North America at 81%, with limited exposure to other regions. This concentration can lead to missed opportunities in emerging markets, which may offer higher growth potential. A more geographically diversified portfolio can reduce regional risk and capitalize on global economic trends. Consider increasing exposure to underrepresented regions like Asia or Latin America to enhance diversification and capture diverse growth opportunities.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio is skewed towards mega-cap stocks at 46%, with big and medium caps making up a significant portion. While mega-caps provide stability and reliable returns, they may limit growth potential compared to smaller, more agile companies. A diversified market cap allocation can balance stability with growth, offering exposure to different company sizes and stages. Consider incorporating small-cap stocks to enhance growth potential while maintaining a stable core.

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's asset allocation could potentially be optimized using the Efficient Frontier, which identifies the best risk-return ratio for a given set of assets. This process involves adjusting the current allocation to achieve a more efficient mix, maximizing returns for the level of risk taken. While the current allocation is well-positioned, exploring optimization opportunities can enhance performance. Regularly reassessing the portfolio's efficiency ensures alignment with changing market conditions and investor goals.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with contributions from both ETFs. While not a primary focus, dividends provide a steady income stream, which can be reinvested for compounding growth. For investors seeking income, higher-yielding assets may be considered. However, balancing dividend income with growth potential is essential to maintain a diversified portfolio aligned with long-term goals.

Ongoing product costs Info

  • 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's total expense ratio (TER) is impressively low at 0.04%, thanks to the cost-efficient Vanguard ETFs. Low costs are a significant advantage, enhancing long-term returns by minimizing drag on performance. Maintaining a focus on cost-effective investments is crucial for optimizing growth. Regularly reviewing and comparing expense ratios can ensure continued cost efficiency, contributing to better overall portfolio performance.

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