A cautiously diversified portfolio with a strong foundation in stocks and bonds

Report created on Jul 28, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is structured with a 50% allocation in the Vanguard Total Stock Market Index Fund, 25% in the Vanguard Total Bond Market Index Fund, and another 25% in the Vanguard Total International Stock Index Fund. This composition reflects a cautious but well-diversified approach, balancing between stocks (75%) and bonds (25%), with a minimal cash position. The emphasis on index funds from a reputable provider like Vanguard underscores a preference for broad market exposure and low-cost investing. Compared to a typical cautious profile portfolio, this one leans slightly more towards equities, suggesting a higher tolerance for risk and volatility within the cautious spectrum.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.42%, with a maximum drawdown of -27.83%. This performance, especially the max drawdown, is indicative of the portfolio's resilience during market downturns. The days contributing to 90% of returns being concentrated in just 30 days highlights the unpredictable nature of market gains, underscoring the importance of staying invested rather than trying to time the market.

Projection Info

Using a Monte Carlo simulation, which projects future performance based on historical data, the portfolio shows a wide range of outcomes. The 50th percentile outcome suggests a significant potential for growth (170.1%), while the 5th percentile at 5.8% indicates resilience in adverse scenarios. However, it's crucial to remember that these simulations are based on past data and cannot guarantee future results. They are useful for understanding potential volatility and outcomes, not for precise predictions.

Asset classes Info

  • Stocks
    74%
  • Bonds
    25%
  • Cash
    1%

The portfolio's asset class distribution, with 74% in stocks and 25% in bonds, is well-aligned with its cautious profile. This allocation allows for growth through equities while using bonds to mitigate overall volatility. The small cash position provides liquidity without sacrificing too much potential growth. This balance is key for investors who seek moderate growth but are wary of large market swings.

Sectors Info

  • Technology
    19%
  • Financials
    13%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is broadly diversified, with the largest exposures in Technology (19%) and Financial Services (13%). This sector spread is typical for a portfolio heavily invested in broad market index funds, reflecting the composition of the global market. However, the significant weight in technology, a sector known for its volatility, slightly increases the portfolio's risk profile within its cautious stance.

Regions Info

  • North America
    52%
  • No data
    25%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic exposure is predominantly in North America (52%), with a substantial portion classified as unknown (25%), likely due to the international fund's diversified global exposure. The developed Europe and Asia allocations add international diversification, reducing the portfolio's vulnerability to region-specific economic downturns. However, the minimal exposure to emerging markets and specific regions like Latin America and Africa/Middle East suggests room for increased diversification.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    23%
  • Mid-cap
    14%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization exposure leans heavily towards larger companies, with 32% in mega-cap and 23% in large-cap stocks. This bias towards bigger, more established companies is typical for investors seeking stability and lower volatility. However, the relatively smaller allocations to medium, small, and micro-cap stocks limit the portfolio's potential for high growth rates that these smaller companies can offer.

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 allocation suggests the portfolio is already optimized for a cautious investor seeking a balance between growth and preservation. Its position on the Efficient Frontier might indicate an optimal risk-return ratio given its current composition. However, periodically reviewing and potentially rebalancing the asset allocation can ensure it remains aligned with changing market conditions and the investor's evolving risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund Institutional Shares 3.50%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 2.10%
  • Vanguard Total Stock Market Index Fund Admiral Shares 0.90%
  • Weighted yield (per year) 1.85%

The dividend yield of the portfolio averages at 1.85%, with the bond component contributing a higher yield (3.50%) compared to the stocks. This yield contributes to the portfolio's total return, offering a steady income stream in addition to potential capital gains. For cautious investors, this dividend income can be particularly attractive as it provides returns even in flat or declining markets.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund Institutional Shares 0.02%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.09%
  • Vanguard Total Stock Market Index Fund Admiral Shares 0.04%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from exceptionally low costs, with a Total Expense Ratio (TER) of just 0.05%. This low cost is a significant advantage, as it means more of the investment's return is kept by the investor rather than paid out in fees. Over the long term, lower costs can have a substantial impact on the portfolio's growth, making it an essential factor in the portfolio's overall efficiency.

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