A balanced portfolio with strong U.S. focus and low costs aiming for moderate risk growth

Report created on Jan 17, 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 primarily composed of two Vanguard ETFs, with an 80% allocation to U.S. stocks and 20% to international stocks. This structure aligns with a balanced risk profile, providing broad exposure to both domestic and global markets. Compared to common benchmarks, this allocation leans heavily toward the U.S., which may limit exposure to international growth opportunities. While the portfolio is broadly diversified across sectors, a higher allocation to international assets could enhance global diversification, potentially reducing risk from U.S. market fluctuations.

Growth Info

Historically, the portfolio has demonstrated a strong performance with a Compound Annual Growth Rate (CAGR) of 12.29%. This indicates a robust growth trajectory over the past years, outperforming many standard benchmarks. However, it's important to note the maximum drawdown of -34.77%, highlighting the potential for significant losses during market downturns. This performance suggests a good balance between growth and risk, but investors should remain aware that past performance does not guarantee future results.

Projection Info

Utilizing Monte Carlo simulations, the portfolio's future performance is projected with a median return of 267.05% over the timeframe analyzed. The 5th percentile projects a return of 15.34%, indicating the potential for lower outcomes in adverse market conditions. Monte Carlo analysis uses historical data to simulate a range of future outcomes, but these projections are not guarantees. Investors should use these insights to understand potential risks and returns, while also considering their individual risk tolerance and financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, comprising over 99% of the allocation, with minimal cash and other assets. This concentration in equities aligns with a growth-focused strategy, but it may expose the portfolio to higher volatility. Compared to typical benchmarks, the lack of fixed income or alternative assets reduces diversification. Introducing bonds or other asset classes could help mitigate risk and provide more stability during market downturns, aligning with a balanced investment approach.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is diverse, with a notable concentration in technology at over 28%. This aligns with trends in many growth-oriented portfolios but may increase volatility, especially during periods of tech sector instability. Financial services and consumer cyclicals also have significant weights. The portfolio's sector composition is well-diversified, matching benchmark data, which is a strong indicator of diversification. Investors should monitor sector trends and consider adjusting weights if certain sectors become over- or under-represented.

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 skewed towards North America, with over 81% allocation. This concentration may limit exposure to international markets and the potential benefits of geographic diversification. Compared to global benchmarks, the portfolio underrepresents regions like Europe, Asia, and emerging markets. Increasing allocations to these areas could enhance diversification, potentially reducing risk and capturing growth opportunities outside the U.S., aligning with a more globally balanced investment strategy.

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 appears to be well-positioned on the Efficient Frontier, maximizing the risk-return trade-off given the current asset allocation. This optimization ensures that the portfolio is achieving the best possible returns for the level of risk taken. However, efficiency doesn't necessarily equate to diversification. Regularly reviewing the portfolio's risk-return profile and making adjustments as needed can help maintain its optimal position on the Efficient Frontier, aligning with evolving market conditions and personal investment goals.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.72%

The portfolio's dividend yield stands at 1.72%, with the international ETF contributing a higher yield of 3.4%. Dividends play a crucial role in providing consistent income, especially in volatile markets. For investors seeking income alongside growth, this yield is a positive feature. However, focusing solely on dividend yield could limit growth potential. Balancing growth and income through a mix of high-yield and growth-oriented assets can optimize the portfolio for both income and capital appreciation.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio boasts impressively low costs, with a total expense ratio (TER) of 0.04%. This is a significant advantage, as lower costs enhance long-term performance by preserving more of the investment returns. Compared to industry averages, these costs are exceptionally low, aligning with best practices for cost-efficient investing. Maintaining this low-cost structure will continue to support better compounding of returns over time, reinforcing the portfolio's growth potential.

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