A portfolio that mistook diversification for putting all eggs in two closely related baskets
Report created on May 26, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VE VANGUARD EXTENDED MARKET INDEX FUND INSTITUTIONAL PLUS SHARES
VEMPX - US9229083715 85.00% -
VI VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES
VIIIX - US9220402096 15.00%
This portfolio is like a diet consisting of 85% pizza and 15% pizza with a different topping. With 85% in the Vanguard Extended Market Index Fund and the remaining 15% in the Vanguard Institutional Index Fund, it's like someone tried to diversify by buying Coke and Diet Coke. Both funds are stock-heavy and U.S.-centric, which might sound patriotic but in investing terms, it's like wearing blinders at an international buffet.
Growth
Historically, this portfolio has performed like a roller coaster that only occasionally hands out money. A CAGR of 11.01% isn't shabby, but with a max drawdown of -40.12%, it's like saying you're good at swimming because you haven't drowned yet. Those 18 days that drove 90% of the returns? That's not investing; that's playing financial lottery and hoping your numbers come up.
Projection
Monte Carlo simulations are like video game simulations of your financial future, and this portfolio's results are a wild ride. With a median projection of 295.1% growth, it suggests you might end up rich — or not, considering the 5th percentile is a grim 19.0%. Betting your retirement on this is like planning to marry for money; optimistic, but fundamentally flawed.
Asset classes
- Stocks 99%
- Cash 1%
This portfolio's asset class diversity is like saying you're an adventurous eater because you've tried both pepperoni and cheese pizza. With 99% in stocks and a token 1% in cash, it's as diversified as a one-flavor ice cream shop. This isn't just putting all your eggs in one basket; it's throwing the basket off a cliff and hoping for a soft landing.
Sectors
- Technology 22%
- Financials 17%
- Industrials 15%
- Health Care 12%
- Consumer Discretionary 11%
- Real Estate 6%
- Telecommunications 4%
- Energy 4%
- Consumer Staples 4%
- Basic Materials 4%
- Utilities 2%
Sector-wise, this portfolio loves technology and financial services like a teenager loves their smartphone and allowance. But with such heavy bets on a few sectors, it's vulnerable to industry-specific downturns. It's like building a house with only one type of brick; looks solid until the weather changes.
Regions
- North America 99%
With 99% in North America, this portfolio has the geographical diversity of a hermit. Ignoring the rest of the world not only limits growth opportunities but also exposes you to the full brunt of domestic downturns. It's like refusing to eat anything not made in America; patriotic, but you'll miss out on a lot of good stuff.
Market capitalization
- Small-cap 40%
- Mid-cap 29%
- Micro-cap 15%
- Large-cap 7%
- Mega-cap 7%
The market cap allocation is like someone trying to balance a diet by eating only snacks and appetizers. With a heavy lean towards small and micro-caps, it's gunning for growth but also inviting volatility to the party. This is fine if you enjoy financial heart palpitations.
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 current efficiency is like trying to win a race with a car that only turns right. With a more efficient portfolio available at the same risk level offering a higher expected return of 13.57%, sticking with the current setup is like refusing a faster car because you like the color of your slow one.
Dividends
- VANGUARD EXTENDED MARKET INDEX FUND INSTITUTIONAL PLUS SHARES 1.30%
- VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES 2.60%
- Weighted yield (per year) 1.50%
The dividend yield is like finding loose change in the couch; nice to have but not going to change your life. At a total yield of 1.50%, it's not negligible, but in the context of the portfolio's volatility, it's like putting a Band-Aid on a broken leg.
Ongoing product costs
- VANGUARD EXTENDED MARKET INDEX FUND INSTITUTIONAL PLUS SHARES 0.04%
- VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES 0.02%
- Weighted costs total (per year) 0.04%
At least the portfolio's costs are low, with a total TER of 0.04%. It's one of the few things done right, like remembering to breathe. Low fees are good because they don't eat into your returns, but when the investment strategy is this narrow, it's like having a discount card for a store you never shop at.
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