Balanced portfolio with a strong tilt towards developed markets and low costs

Report created on Aug 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio primarily invests in developed markets with an 80% allocation to the Vanguard FTSE Developed Markets Index Fund ETF Shares and a 20% allocation to the Vanguard S&P 500 ETF. It's characterized by its simplicity, focusing on broad market exposure with a significant emphasis on stocks from financially stable regions. The portfolio is classified as broadly diversified, with a balanced risk profile, scoring a 4 out of 7 on the risk scale and a 4 out of 5 on diversification.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 9.23% and a maximum drawdown of -34.65%, the portfolio's historical performance indicates resilience in diverse market conditions. The days contributing to 90% of returns being limited to 20 suggests significant returns are concentrated in short, potent bursts, highlighting the importance of long-term holding to capture full growth potential.

Projection Info

Monte Carlo simulations, which project future performance based on historical data, suggest a wide range of outcomes for this portfolio. With the 50th percentile at a 298.6% increase and 987 out of 1,000 simulations yielding positive returns, the projections indicate a strong likelihood of favorable outcomes. However, it's crucial to remember that these simulations are speculative and cannot guarantee future results.

Asset classes Info

  • Stocks
    98%
  • Cash
    2%

The portfolio's asset allocation leans heavily towards stocks (98%), with a minimal cash holding (2%). This allocation supports the portfolio's growth orientation but also increases its sensitivity to market volatility. The absence of bonds or alternative investments limits its ability to hedge against stock market downturns.

Sectors Info

  • Financials
    21%
  • Industrials
    17%
  • Technology
    15%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Basic Materials
    6%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    3%

Sectoral allocation shows a balanced approach, with the highest allocations in financial services (21%), industrials (17%), and technology (15%). This mix supports a growth-focused strategy while also offering some level of diversification. However, the significant weight in financial services and industrials may expose the portfolio to sector-specific risks.

Regions Info

  • Europe Developed
    42%
  • North America
    29%
  • Japan
    17%
  • Asia Developed
    5%
  • Australasia
    5%
  • Africa/Middle East
    1%

Geographic allocation underscores a strong preference for developed markets, with 42% in Europe Developed and 29% in North America. This focus enhances stability but may limit exposure to the higher growth potential of emerging markets. The portfolio might benefit from a slight increase in emerging market exposure to tap into their growth dynamics.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    32%
  • Mid-cap
    17%
  • Small-cap
    3%

The market capitalization breakdown, with 45% in mega, 32% in big, and 17% in medium-cap stocks, indicates a conservative approach, favoring established, large-cap companies. This should offer stability, though the limited exposure to small and micro-caps may restrict potential for outsized gains from smaller companies' growth.

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 current portfolio has an expected return of 9.23%, with a risk level of 4 out of 7. Portfolio optimization suggests that adjusting the asset allocation could potentially increase the expected return to 14.56% with a corresponding risk level of 18.37%. This indicates room for improving the risk-return profile, although higher returns would come with increased risk.

Dividends Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.40%

The portfolio's dividend yield stands at 2.40%, combining the yields from both ETFs. This provides a modest income stream, contributing to the total return. For investors seeking growth with a side of income, this yield is a beneficial feature, though the primary focus remains on capital appreciation.

Ongoing product costs Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.05%

With a total expense ratio (TER) of 0.05%, the portfolio benefits from exceptionally low costs, enhancing net returns. Low costs are crucial for long-term growth, as they allow a greater portion of investment returns to compound over time.

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