A balanced portfolio with a strong focus on US equities and efficient cost management

Report created on Jan 26, 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 is heavily weighted towards US equities, with a significant 51% in the Vanguard 500 Index Fund Admiral Shares. It also includes mid-cap, small-cap, and international stocks, providing a broad exposure to different market segments. While the portfolio is broadly diversified, it is heavily concentrated in the US market. This composition aligns well with a balanced investment strategy, offering potential for growth while maintaining some diversification. However, the heavy US focus might expose the portfolio to domestic market risks. To enhance diversification, consider increasing exposure to international markets or alternative asset classes.

Growth Info

Historically, this portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 12.84%. This indicates strong growth over time, outperforming typical benchmarks. However, it also experienced a maximum drawdown of -34.86%, highlighting potential vulnerability during market downturns. The portfolio's performance is concentrated, with 90% of returns occurring on just 31 days. While past performance is not indicative of future results, the historical data suggests a robust growth trajectory. To mitigate drawdown risks, consider diversifying further or incorporating more defensive assets.

Projection Info

Monte Carlo simulations, which use historical data to predict future performance, suggest a wide range of potential outcomes for this portfolio. With 1,000 simulations, the 50th percentile projects a 446.5% return, while the 5th percentile shows a 68.9% increase. These projections highlight the uncertainty of future market conditions. While the annualized return of 14.94% across simulations is promising, it's crucial to remember that these are estimates based on past data. To better manage expectations, regularly review and adjust the portfolio in response to market changes.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly invested in stocks, accounting for 99% of the allocation, with a minimal 1% in cash. This heavy stock allocation suggests a focus on growth, but it may also increase volatility. While stocks offer higher returns over the long term, they can be more volatile in the short term. A more diversified asset class allocation, including bonds or alternative investments, could provide stability and reduce risk. Consider introducing a modest allocation to fixed income or other asset classes to balance growth and stability.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%
  • Basic Materials
    3%
  • Consumer Discretionary
    1%

The sector allocation is notably tech-heavy, with 29% in technology, which could lead to higher volatility, especially during market corrections. Financial services and industrials also hold significant portions at 14% and 11%, respectively. While this sector balance aligns with common benchmarks, the tech concentration may expose the portfolio to sector-specific risks. Diversifying across more sectors could mitigate these risks. Consider adjusting the allocation to reduce tech exposure and increase holdings in defensive sectors like healthcare or consumer staples for greater balance.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is highly concentrated in North America, with 86% exposure. This focus aligns with the US-centric nature of the holdings but limits exposure to international markets, which can offer diversification benefits. The minimal allocation to Europe, Asia, and other regions may miss opportunities in emerging markets. Increasing international exposure could reduce reliance on the US market and enhance diversification. Consider reallocating a portion of assets to funds with broader global reach, potentially including emerging markets, to balance geographic risks.

Market capitalization Info

  • Mega-cap
    37%
  • Mid-cap
    29%
  • Large-cap
    27%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization is well-distributed, with 37% in mega-cap stocks, 29% in medium-cap, and 27% in large-cap. This spread provides a balance between stability and growth potential. However, the small-cap exposure is relatively low at 5%, which could limit growth opportunities. Small-cap stocks often offer higher growth potential but come with increased risk. Adjusting the allocation to include a slightly higher percentage of small-cap stocks might enhance growth prospects. Ensure this aligns with your risk tolerance and investment goals.

Redundant positions Info

  • VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES
    Vanguard S&P 500 Growth Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    VANGUARD 500 INDEX FUND ADMIRAL SHARES
    VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES
    High correlation

The portfolio consists of highly correlated assets, particularly among US equity funds. This correlation indicates that these assets tend to move together, which can limit diversification benefits during market downturns. While correlation can lead to amplified gains in rising markets, it also increases risk when markets fall. To improve diversification, consider reducing holdings in overlapping funds and adding assets with lower correlation, such as international or sector-specific funds. This strategy can help balance risk and return, particularly in volatile markets.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return balance. However, the current asset allocation, with its high correlation among US equities, may limit optimization potential. Before optimizing, consider reducing overlapping assets that don't contribute to diversification. The goal is to achieve a more efficient portfolio by adjusting the allocation among existing assets. This approach aims to enhance returns for a given level of risk, ensuring the portfolio is well-positioned for future market conditions.

Dividends Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 1.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES 1.00%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 3.20%
  • Weighted yield (per year) 1.41%

The portfolio's dividend yield is modest at 1.41%, with the Vanguard Total International Stock Index Fund contributing the highest yield at 3.20%. Dividends provide a steady income stream, which can be particularly appealing for income-focused investors. While the yield is not the primary focus for a growth-oriented portfolio, it does add some stability. To enhance income, consider increasing exposure to high-dividend funds or stocks. However, ensure this aligns with your overall investment strategy and risk tolerance, as high yields can sometimes indicate higher risk.

Ongoing product costs Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES 0.05%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES 0.05%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.12%
  • Weighted costs total (per year) 0.06%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.06%. This low cost structure supports better long-term performance by minimizing expenses that can erode returns over time. Vanguard funds are known for their cost-efficiency, which is a significant advantage in this portfolio. Maintaining low costs is crucial for maximizing net returns. Continue to monitor expense ratios and consider rebalancing if more cost-effective options become available. This focus on cost management aligns well with best practices for long-term investment success.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey