A balanced approach to global diversification with a strong foundation in US equities

Report created on May 25, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio predominantly consists of two ETFs: 80% in a Vanguard S&P 500 ETF, focusing on large-cap US equities, and 20% in the Vanguard Total International Stock Index Fund ETF, offering exposure to non-US equities. This composition reflects a strategic emphasis on US markets, complemented by diversified international exposure. The allocation between these two funds suggests a balanced approach, aiming to capture growth in the US while mitigating risks through global diversification.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 12.22%, with a maximum drawdown of -33.88%. The performance is notable for its resilience and growth potential, largely attributable to the robust performance of the US equity market. The days contributing to 90% of returns highlight the impact of significant market movements on portfolio gains. Comparing these figures to a benchmark would further contextualize performance, but the historical data suggests a strong foundation for growth.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a wide range of potential future performances for this portfolio. With a median projection of a 251% increase and a 10.80% annualized return across all simulations, the portfolio shows promising growth prospects. However, it's crucial to remember that these simulations are based on past trends, which do not guarantee future results.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The allocation is nearly entirely in stocks (99%), with a minimal cash position (1%). This high equity exposure aligns with the portfolio's balanced risk profile but leans towards a more aggressive stance given the minimal cash holdings. Diversification across asset classes is limited, emphasizing the portfolio's reliance on equity market performance for returns.

Sectors Info

  • Technology
    28%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is broadly diversified, with a significant emphasis on technology (28%) and financial services (16%). This sectoral composition is reflective of the current market landscape, where technology and financial sectors play pivotal roles. However, the heavy weighting towards technology introduces sector-specific risks, particularly concerning market volatility and valuation levels.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is heavily skewed towards North America (81%), with modest allocations to developed Europe (8%) and emerging Asian markets (3%). This geographic distribution underscores a strong bias towards US and North American markets, potentially limiting exposure to growth opportunities in emerging and developed non-US markets.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    33%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization exposure is concentrated in mega (46%) and big (33%) cap stocks, with a smaller allocation to medium (18%) and negligible exposure to small and micro-caps. This composition suggests a preference for stability and lower volatility associated with larger, more established companies but may limit potential high-growth opportunities found in smaller cap equities.

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.

Considering the Efficient Frontier, this portfolio may not be fully optimized for the best possible risk-return ratio due to its heavy emphasis on US equities and large-cap stocks. Adjusting the allocation to include a broader range of asset classes, sectors, and geographic exposures could potentially enhance returns for the same level of risk or reduce volatility without sacrificing performance.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.62%

The portfolio offers a blended dividend yield of 1.62%, with the international fund contributing a higher yield (2.90%) compared to the S&P 500 ETF (1.30%). This yield contributes to the portfolio's total return, providing a steady income stream in addition to potential capital appreciation. The focus on dividend-yielding investments can offer a buffer during market volatility.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.03%

The total expense ratios (TER) for the portfolio components are exceptionally low, at 0.03% for the Vanguard S&P 500 ETF and 0.05% for the Vanguard Total International Stock Index Fund ETF. These low costs are beneficial for long-term performance, as they minimize the drag on returns, allowing more of the investment's growth to compound over time.

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