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A balanced portfolio with strong diversification and moderate international exposure

Report created on Mar 28, 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 is heavily weighted towards equities, with 99% in stocks and 1% in cash. This composition leans towards growth, as equities typically offer higher returns over time compared to other asset classes like bonds. The allocation includes a broad range of individual stocks and a significant 30% in the Vanguard Total International Stock Index Fund ETF, providing exposure to global markets. Compared to a benchmark, the portfolio appears well-diversified, though it could benefit from a small allocation to bonds for risk mitigation. Consider introducing bonds or other fixed-income assets to balance potential equity volatility.

Growth Info

Historically, the portfolio has performed impressively with a Compound Annual Growth Rate (CAGR) of 17.08%. This indicates strong growth, but it's important to note the significant maximum drawdown of -37.02%, which shows vulnerability during market downturns. The portfolio's performance is likely driven by its equity-heavy composition, which tends to outperform in bullish markets. To maintain robust performance while reducing potential drawdowns, consider diversifying into less volatile asset classes. Keep in mind that past performance is not a guarantee of future results.

Projection Info

Monte Carlo simulations, which use historical data to forecast future performance, suggest a wide range of potential outcomes for the portfolio. With a median projected return of 1,255.9%, the simulations highlight the potential for substantial growth. However, the 5th percentile outcome of 107.7% emphasizes the inherent uncertainty in investing. While the simulations are encouraging, they rely on historical trends, which may not predict future market conditions. Regularly reviewing and adjusting the portfolio based on changing market dynamics can help optimize future performance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is overwhelmingly concentrated in stocks, with minimal allocation to cash and no exposure to bonds or other asset classes. This focus on equities can drive higher returns but also increases volatility and risk. Compared to diversified benchmarks, the absence of bonds or alternative investments might limit risk management opportunities. To enhance diversification and potentially reduce overall risk, consider introducing a small allocation to bonds or real estate investment trusts (REITs) to provide more balance and stability.

Sectors Info

  • Industrials
    18%
  • Consumer Discretionary
    16%
  • Technology
    15%
  • Health Care
    13%
  • Financials
    11%
  • Consumer Staples
    9%
  • Energy
    6%
  • Basic Materials
    4%
  • Real Estate
    4%
  • Telecommunications
    4%
  • Utilities
    1%

Sector allocation is diversified across 10 sectors, with a notable concentration in Industrials (18%), Consumer Cyclicals (16%), and Technology (15%). This allocation aligns well with common benchmarks, suggesting a balanced approach. However, the concentration in cyclical sectors may increase volatility during economic downturns. To mitigate this, consider gradually increasing exposure to more defensive sectors like Utilities or Consumer Defensive, which tend to perform better during market stress. This adjustment can help stabilize returns across different economic cycles.

Regions Info

  • North America
    70%
  • Europe Developed
    14%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (70%), with limited exposure to emerging markets. While this reflects the dominance of the U.S. market, it may miss growth opportunities in other regions. The Vanguard Total International Stock Index Fund ETF provides some diversification, but increasing exposure to emerging markets could enhance growth potential and reduce reliance on U.S. performance. Consider gradually reallocating a portion of the North American assets to regions like Asia or Latin America for greater global diversification.

Market capitalization Info

  • Large-cap
    51%
  • Mega-cap
    41%
  • Mid-cap
    5%
  • Small-cap
    1%

The portfolio's market capitalization is predominantly in Big (51%) and Mega (41%) companies, with minimal exposure to Medium (5%) and Small (1%) caps. This composition suggests a focus on established, stable companies, which can offer reliable returns. However, small and medium-cap stocks often provide higher growth potential, albeit with increased risk. To capture this potential, consider gradually increasing exposure to smaller-cap stocks, which can enhance diversification and offer higher returns during favorable market conditions.

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.

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The portfolio's risk-return profile can potentially be optimized using the Efficient Frontier, which identifies the best risk-return balance for a given set of assets. By reallocating existing holdings, the portfolio could achieve a more favorable risk-return ratio. This process involves adjusting the weights of current assets to maximize returns for a given level of risk. While this optimization focuses on existing assets, it may not address diversification needs. Consider consulting with a financial advisor to explore rebalancing opportunities that align with your risk tolerance and investment goals.

Dividends Info

  • Apple Inc 0.40%
  • AbbVie Inc 3.10%
  • Automatic Data Processing Inc 1.40%
  • Arthur J Gallagher & Co 0.70%
  • Caterpillar Inc 1.60%
  • Chubb Ltd 0.90%
  • Coca-Cola Consolidated Inc. 0.50%
  • Costco Wholesale Corp 0.50%
  • Cintas Corporation 0.70%
  • Deere & Company 1.00%
  • Dover Corporation 1.20%
  • Ford Motor Company 7.60%
  • Alphabet Inc Class C 0.50%
  • WW Grainger Inc 0.80%
  • International Business Machines 2.70%
  • Johnson & Johnson 3.00%
  • The Coca-Cola Company 2.10%
  • Linde plc Ordinary Shares 1.20%
  • Eli Lilly and Company 0.70%
  • Lowe's Companies Inc 2.00%
  • McDonald’s Corporation 2.20%
  • McKesson Corporation 0.30%
  • Meta Platforms Inc. 0.30%
  • Microsoft Corporation 0.80%
  • Realty Income Corp 5.60%
  • Old Dominion Freight Line Inc 0.60%
  • Sherwin-Williams Co 0.80%
  • Texas Pacific Land Trust 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.03%

The portfolio's dividend yield stands at 2.03%, with contributions from companies like AbbVie Inc (3.10%) and Realty Income Corp (5.60%). This yield provides a steady income stream, which can be appealing for investors seeking regular cash flow. However, the focus on growth stocks may limit overall yield compared to a dividend-focused portfolio. To enhance income potential, consider increasing allocation to high-dividend stocks or dividend-focused ETFs. This approach can provide a balance between growth and income, catering to both capital appreciation and cash flow needs.

Ongoing product costs Info

  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are impressively low, with the Vanguard Total International Stock Index Fund ETF having a Total Expense Ratio (TER) of 0.05%. Low costs support better long-term performance by minimizing the drag on returns. Maintaining a focus on cost-efficient investments is crucial for maximizing net returns. Regularly reviewing and optimizing for cost efficiency can further enhance performance. Consider evaluating other holdings for cost-effectiveness, ensuring that expense ratios remain competitive and aligned with investment goals.

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