A balanced global portfolio with a strong focus on equities and moderate bond exposure

Report created on Dec 16, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 90% in the Vanguard Total World Stock Index Fund, while the remaining 10% is split equally between two Treasury ETFs. This composition suggests a focus on growth through global equity exposure, complemented by a small allocation to bonds for stability. The high equity weighting is typical for those seeking capital appreciation, but it also introduces higher volatility. To balance risk and reward, consider adjusting the bond allocation if more stability is desired or increasing cash reserves for liquidity.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 11.83%, indicating strong past performance. However, the maximum drawdown of nearly 30% highlights potential risks during market downturns. While past performance is not a guarantee of future results, understanding these figures helps set realistic expectations. To mitigate potential losses, consider maintaining a diversified mix of assets and possibly introducing hedging strategies or stop-loss orders to protect against significant downturns.

Projection Info

Using Monte Carlo simulations, potential future outcomes of the portfolio have been modeled based on historical data. These simulations suggest a median expected return of 64.27%, with a possibility of negative outcomes at the 5th percentile. While Monte Carlo analysis provides insight into potential risks and returns, it's based on historical data and assumptions that may not hold in the future. Regularly reassessing portfolio allocations and staying informed about market conditions can help navigate uncertain futures.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio is predominantly invested in stocks (approximately 89%), with a minor allocation to bonds and cash. This heavy stock allocation reflects a growth-oriented strategy, offering high return potential but also increased volatility. Diversification across asset classes can reduce risk, so consider increasing bond exposure if seeking stability or exploring alternative assets for further diversification. Balancing the asset classes according to personal risk tolerance and financial goals is essential for long-term success.

Sectors Info

  • Technology
    22%
  • Financials
    15%
  • Industrials
    10%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    2%

The sectoral allocation is led by technology, financial services, and industrials, providing exposure to both growth and cyclical sectors. This balance can offer resilience across different economic cycles, but the high concentration in technology may increase vulnerability to sector-specific downturns. To mitigate sector risk, consider diversifying further into underrepresented sectors like utilities or consumer defensive, which can provide stability during economic downturns and complement the existing growth-oriented sectors.

Regions Info

  • North America
    59%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio has significant exposure to North America, followed by Europe and Asia. This distribution offers a blend of developed and emerging markets, providing diversification benefits. However, the concentration in North America could lead to region-specific risks. To enhance geographic diversification, consider increasing exposure to emerging markets or underrepresented regions like Latin America or Africa, which may offer growth opportunities and reduce reliance on any single economic zone.

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 Efficient Frontier concept suggests that this portfolio could be optimized by adjusting the allocation between current assets to achieve the best possible risk-return ratio. This means finding the right balance that maximizes returns for a given level of risk. Consider using financial tools or consulting with an advisor to explore possible rebalancing strategies. While optimization can enhance efficiency, it should align with overall investment objectives and risk tolerance, ensuring that any changes support long-term goals.

Dividends Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.30%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 4.20%
  • Vanguard Total World Stock Index Fund 1.10%
  • Weighted yield (per year) 1.36%

The portfolio's overall dividend yield is 1.36%, primarily driven by the Treasury ETFs. Dividends can provide a steady income stream, which is particularly valuable during periods of market volatility. While the yield is modest, reinvesting dividends can enhance long-term returns through compounding. Consider reviewing dividend policies regularly and exploring other income-generating assets if a higher yield is desired. Balancing growth and income objectives is key to meeting financial goals.

Ongoing product costs Info

  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Total World Stock Index Fund 0.10%
  • Weighted costs total (per year) 0.09%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.09%. Keeping expenses low is crucial for maximizing net returns over time, as high fees can erode gains. Vanguard funds are known for their cost efficiency, which is a significant advantage. However, always remain vigilant about any fee changes and explore other low-cost investment options if necessary. Regularly reviewing and understanding investment costs can significantly impact long-term portfolio performance.

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