A conservative portfolio with high cash allocation and limited sector diversification

Report created on Mar 25, 2025

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is predominantly composed of a Vanguard Treasury Money Market Fund, making up 67% of the allocation, with the remaining 33% in a Vanguard Russell 1000 Growth Index Fund ETF. This structure leans heavily on cash-like investments, reflecting a conservative stance. Comparing against typical benchmarks, this high allocation to money markets indicates a focus on capital preservation. The limited exposure to equities might constrain growth potential but aligns with low-risk objectives. Consider diversifying further to balance risk and return more effectively.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 6.64%, with a maximum drawdown of -19.75%. This performance suggests moderate growth with some volatility. Compared to benchmarks, the portfolio's drawdown is relatively high for a conservative profile, indicating potential for improvement. While past performance is not indicative of future results, understanding these metrics helps in evaluating risk tolerance. To enhance stability, consider revisiting asset allocations to cushion against downturns.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a broad range of potential returns. With 1,000 simulations, the median outcome suggests a 225.3% increase, while the 5th percentile indicates a 30.8% rise. These projections underscore the uncertainty inherent in investing, as past data may not predict future performance. Regularly reviewing and adjusting allocations can help align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    33%

The portfolio's asset allocation is skewed towards cash (67%) and stocks (33%), limiting diversification across asset classes. This concentration may restrict the portfolio's ability to capitalize on different market conditions. Typically, a diversified portfolio includes a mix of equities, bonds, and other assets. By expanding into additional asset classes, the portfolio could achieve more balanced risk and return, potentially improving long-term outcomes.

Sectors Info

  • Technology
    16%
  • Consumer Discretionary
    5%
  • Telecommunications
    5%
  • Health Care
    2%
  • Financials
    2%
  • Industrials
    1%
  • Consumer Staples
    1%

Sector allocation is concentrated, with technology (16%) and consumer cyclicals (5%) leading. This focus may expose the portfolio to sector-specific risks, such as tech volatility during interest rate changes. A broader sector distribution could mitigate these risks, providing stability across varying economic cycles. Aligning with sector benchmarks can enhance diversification, offering a more resilient investment approach.

Regions Info

  • North America
    33%

The portfolio is entirely focused on North American assets (33%), lacking geographic diversification. This concentration could increase vulnerability to regional economic shifts. Expanding exposure to international markets could reduce reliance on North America, enhancing global diversification. A balanced geographic allocation can better withstand regional downturns, offering a cushion against potential losses.

Market capitalization Info

  • Mega-cap
    23%
  • Large-cap
    7%
  • Mid-cap
    3%

Market capitalization is predominantly in mega-cap stocks (23%), with minimal exposure to smaller companies. This concentration in large-cap stocks may limit potential growth opportunities often found in smaller, more dynamic companies. Diversifying across different market caps can enhance the portfolio's growth potential while maintaining stability. Consider adjusting allocations to include small and mid-cap stocks for a more balanced approach.

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 risk-return profile could be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. Although currently conservative, slight adjustments in asset allocation could enhance returns without significantly increasing risk. This involves reallocating existing assets rather than introducing new ones, ensuring an efficient balance between risk and reward.

Dividends Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard Treasury Money Market Fund 4.60%
  • Weighted yield (per year) 3.21%

The portfolio's dividend yield stands at 3.21%, driven by the Vanguard Treasury Money Market Fund's 4.60% yield. Dividends contribute to total returns, providing a steady income stream. For conservative investors, this yield aligns well with income-focused goals. However, exploring higher-yielding equities could enhance income potential. Balancing yield with growth ensures a robust income strategy.

Ongoing product costs Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard Treasury Money Market Fund 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is low at 0.08%, reflecting cost-efficient management. Low costs are crucial for maximizing net returns over time, as high fees can erode gains. This alignment with cost-effective practices is commendable. Continually monitoring and minimizing fees will support long-term performance, ensuring more of your investment works for you.

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