A balanced portfolio with strong US focus and tech sector concentration

Report created on Jan 24, 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 comprises three Vanguard ETFs: the FTSE All-World ex-US Index Fund, the S&P 500, and the Information Technology Index Fund. Each ETF holds a significant portion, with the first two at 40% and the latter at 20%. This composition offers a diversified exposure across global markets and sectors. The balance between US and non-US equities aligns with a broad diversification strategy. However, the heavy weighting in technology may expose the portfolio to sector-specific risks. Consider periodically reviewing the allocation to ensure it aligns with your risk tolerance and market conditions.

Growth Info

The portfolio has shown strong historical performance, boasting a Compound Annual Growth Rate (CAGR) of 12.91%. This outpaces many traditional benchmarks, indicating effective asset selection and allocation. However, it also experienced a maximum drawdown of -33.01%, highlighting potential volatility during market downturns. It's crucial to remember that past performance doesn't guarantee future results. Maintaining a diversified approach can help mitigate risks associated with such drawdowns, ensuring more stable returns over time.

Projection Info

Monte Carlo simulations predict a wide range of potential outcomes for this portfolio, using 1,000 simulations based on historical data. The median projection shows a portfolio value increase of 505.4%, with 993 simulations yielding positive returns. While the annualized return across all simulations is 15.77%, it's important to acknowledge that these projections are based on past data and may not account for future market changes. Regularly reviewing and adjusting your portfolio can help align with your financial goals and risk tolerance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly composed of stocks, accounting for 99% of the allocation, with a minimal 1% in cash. This heavy equity exposure aligns with a growth-oriented strategy, suitable for investors seeking capital appreciation over time. However, this allocation may increase vulnerability to market volatility. Diversifying into other asset classes like bonds or real estate could provide stability and reduce overall risk. Balancing growth and stability is key to achieving long-term investment goals.

Sectors Info

  • Technology
    38%
  • Financials
    15%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

This portfolio is heavily weighted towards the technology sector, making up 38% of the allocation. While this may capitalize on the sector's growth potential, it also increases exposure to sector-specific risks, particularly during periods of regulatory changes or interest rate hikes. Other sectors like financial services and industrials provide additional balance but are significantly less represented. Consider diversifying across other sectors to mitigate risks and capture broader market 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 leans heavily towards North America, with 63% exposure, reflecting a strong US market focus. While this aligns with recent US market outperformance, it may limit exposure to growth opportunities in emerging markets. The remaining allocation spans developed regions like Europe and Japan. To enhance diversification, consider gradually increasing exposure to underrepresented regions, which could provide a hedge against US market volatility and capture global growth trends.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    33%
  • Mid-cap
    15%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio shows a strong preference for large-cap stocks, with 48% in mega and 33% in big caps. This allocation offers stability and established market presence, often translating into lower volatility. However, smaller market caps, such as medium and small, are underrepresented. These smaller companies can offer higher growth potential, albeit with increased risk. Balancing market capitalization exposure can enhance diversification and provide opportunities for both steady income and growth.

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 allocation could be optimized using the Efficient Frontier concept, which aims to achieve the best possible risk-return ratio. This approach involves adjusting the weightings of existing assets to enhance returns for a given level of risk. While the portfolio is already well-diversified, exploring slight adjustments in sector or geographic exposure may improve efficiency. It's important to note that optimization focuses on risk-return balance, not necessarily broader diversification.

Dividends Info

  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.24%

With a total dividend yield of 1.24%, this portfolio offers modest income potential. The Vanguard FTSE All-World ex-US Index Fund contributes the highest yield at 1.60%, while the Information Technology Index Fund provides the lowest at 0.60%. Dividends can enhance total returns, especially in stable markets. For investors prioritizing income, exploring higher-yielding assets or funds could be beneficial. Balancing growth and income is crucial for aligning with long-term investment objectives.

Ongoing product costs Info

  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of 0.06%. This low cost structure supports better long-term performance by minimizing the drag on returns. Vanguard's ETFs are known for their cost efficiency, making them an attractive choice for cost-conscious investors. Maintaining low costs is crucial for maximizing net returns, especially over extended investment horizons. Continuously monitoring and managing expenses can further enhance portfolio efficiency.

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