A balanced portfolio with a strong focus on US equities and moderate international exposure

Report created on Dec 19, 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 composed of two main ETFs, with a significant allocation of 70% to the Vanguard Total Stock Market Index Fund ETF Shares and 30% to the Vanguard Total International Stock Index Fund ETF Shares. This composition indicates a preference for broad market exposure, with a heavy tilt towards domestic equities. The allocation reflects a strategic decision to capture the growth potential of the US market while diversifying internationally. The focus on ETFs suggests a low-cost, passive investment strategy. Investors should consider how this allocation aligns with their risk tolerance and investment goals, especially in terms of geographical diversification and potential market volatility.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 11.25%, which is commendable. However, it also experienced a maximum drawdown of -34.6%, highlighting periods of significant volatility. The fact that 90% of returns were generated in just 27 days underscores the importance of staying invested through market cycles to capture these gains. While past performance is not indicative of future results, understanding these trends can help investors manage expectations. It's crucial to maintain a long-term perspective and avoid making impulsive decisions based on short-term market fluctuations.

Projection Info

The Monte Carlo simulation, which ran 1,000 scenarios, provides a range of potential future outcomes based on historical data. The median projection suggests a 226.27% increase in portfolio value, with a 67th percentile outcome of 324.52%. While 953 simulations resulted in positive returns, it's important to note that these projections are not guarantees. They rely on past data and assumptions that may not hold in the future. Investors should use these insights as one of many tools for planning but remain aware of the inherent uncertainties in financial markets.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks, accounting for over 99% of the holdings. This concentration in equities suggests a growth-oriented strategy, but it also exposes the portfolio to higher volatility compared to a more diversified asset mix. The minimal cash and other asset holdings indicate a focus on capital appreciation over liquidity or income. Investors might consider whether this level of exposure aligns with their risk tolerance and financial goals. Diversifying into other asset classes like bonds or real estate could potentially reduce risk and enhance stability.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Health Care
    11%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation reveals a notable concentration in technology, which makes up over 25% of the portfolio. This focus reflects a bet on the continued growth and innovation within the tech industry. However, it also increases vulnerability to sector-specific risks. Other significant sectors include financial services, healthcare, and industrials. While this spread across various sectors provides some diversification, the heavy weighting in technology could lead to increased volatility. Investors should evaluate whether this sector balance aligns with their risk appetite and consider adjusting allocations for more stability.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio has a strong geographic bias towards North America, with over 72% exposure. This concentration suggests confidence in the US market's prospects but also limits international diversification. With only 30% allocated to international stocks, there's moderate exposure to regions like Europe, Asia, and emerging markets. This geographic mix can affect the portfolio's performance depending on regional economic conditions and currency fluctuations. Investors might explore increasing exposure to global markets to enhance diversification and potentially capture growth opportunities outside the US.

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 could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset allocations. Currently, the portfolio is heavily weighted towards US equities, which might not be the most efficient allocation. By exploring different combinations of the existing assets, the portfolio could achieve a more favorable balance between risk and return. Investors should consider whether the current allocation meets their risk tolerance and financial objectives, and explore adjustments that could enhance efficiency without compromising their investment goals.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.39%

The portfolio's dividend yield stands at 1.39%, with the Vanguard Total Stock Market Index Fund ETF Shares yielding 1.3% and the Vanguard Total International Stock Index Fund ETF Shares yielding 1.6%. While not a primary focus, dividends can provide a steady income stream and contribute to total returns, especially during volatile market periods. Investors seeking higher income might consider increasing exposure to dividend-focused investments. However, it's essential to balance this with growth objectives and the potential trade-offs in terms of 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 benefits from low costs, with a total expense ratio (TER) of 0.04%. This cost efficiency is achieved through the use of Vanguard ETFs, known for their low fees. Minimizing expenses is crucial for maximizing long-term returns, as even small differences in fees can compound significantly over time. Investors should continue to monitor and compare costs across potential investments, ensuring they maintain a cost-effective strategy. Keeping expenses low can enhance the portfolio's performance, especially in a low-return environment.

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