A well-diversified balanced portfolio with a focus on large-cap equities and international exposure

Report created on Dec 20, 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 three ETFs with a focus on equities: Vanguard Total International Stock Index Fund ETF (40%), Vanguard S&P 500 ETF (36%), and Vanguard Extended Market Index Fund ETF (24%). This composition reflects a strong emphasis on large-cap U.S. equities and international stocks, providing broad exposure to global markets. Compared to typical balanced portfolios, this allocation leans heavily towards equities, which could offer higher growth potential but also increased volatility. It aligns well with a balanced risk profile, offering diversification across different markets and sectors.

Growth Info

The historic performance of this portfolio shows a Compound Annual Growth Rate (CAGR) of 10.25%, which is impressive for a balanced profile. This growth rate indicates strong past performance, but it's crucial to remember that past results don't guarantee future success. The maximum drawdown of -35.64% highlights potential volatility, suggesting that investors should be prepared for significant fluctuations. Compared to common benchmarks, this performance is competitive, indicating that the portfolio has effectively captured market gains while managing risks.

Projection Info

Forward projections using Monte Carlo simulations suggest a median outcome of 243.56% growth, with positive returns in 959 out of 1,000 scenarios. Monte Carlo analysis uses historical data to simulate potential future outcomes, providing a range of expected returns. While these projections are promising, it's important to note that they are based on historical trends and assumptions, which may not fully predict future market conditions. Investors should use these projections as a guide rather than a guarantee, maintaining flexibility to adjust strategies as needed.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is highly concentrated in equities, with 98.8% allocated to stocks and a minimal amount in cash and other assets. While this allocation supports growth potential, it also increases exposure to market volatility. Compared to balanced benchmarks, which typically include bonds for stability, this portfolio is more aggressive. Investors might consider adding fixed-income assets to reduce volatility and provide a buffer during market downturns, enhancing overall stability without sacrificing growth entirely.

Sectors Info

  • Technology
    22%
  • Financials
    17%
  • Industrials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Energy
    4%
  • Real Estate
    4%
  • Utilities
    3%

Sector allocation is well-distributed, with notable weights in technology (21.89%), financial services (16.98%), and industrials (12.73%). This diverse sector exposure aligns closely with benchmark norms, indicating a balanced approach to capturing economic growth across industries. However, the significant weight in technology could lead to higher volatility, especially during periods of market correction or interest rate changes. Maintaining a watchful eye on sector trends and redistributing as needed can help manage risks and capitalize on emerging opportunities.

Regions Info

  • North America
    63%
  • Europe Developed
    16%
  • Asia Emerging
    7%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is diversified, with 62.58% in North America and significant exposure to Europe, Asia, and other regions. This distribution provides a broad global perspective, enhancing diversification and reducing region-specific risks. Compared to global benchmarks, there is a slight underweight in emerging markets, which could limit growth potential in rapidly developing economies. To enhance diversification and capture growth, consider increasing exposure to underrepresented regions like Latin America and Africa/Middle East.

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 is well-positioned on the Efficient Frontier, indicating an optimal risk-return balance based on current assets. This means the portfolio is effectively maximizing returns for the level of risk taken. However, further optimization could be achieved by adjusting allocations to better align with personal risk tolerance and investment goals. This process involves rebalancing assets to ensure that the portfolio remains efficient as market conditions change, improving the potential for long-term success.

Dividends Info

  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Extended Market Index Fund ETF Shares 0.80%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.16%

With a total dividend yield of 1.16%, the portfolio provides moderate income from dividends. This yield is consistent with a growth-oriented strategy, where dividends supplement returns rather than drive them. For investors seeking more income, exploring higher-yielding assets or dividend-focused funds could be beneficial. However, balancing growth and income is key, as high-yield investments may come with increased risk or lower capital appreciation potential.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. Low fees mean more of the portfolio's returns are retained, enhancing compounding effects over time. Compared to industry averages, these costs are very competitive, reinforcing the portfolio's efficiency. Continuing to monitor and manage costs can help maintain this advantage, ensuring that expenses do not erode the portfolio's growth potential.

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