A balanced portfolio with strong U.S. focus and low-cost diversified equity exposure
Report created on Mar 5, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 80.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00%
The portfolio is primarily composed of two ETFs: 80% in the Vanguard Total Stock Market Index Fund ETF and 20% in the Vanguard Total International Stock Index Fund ETF. This structure indicates a strong equity focus with a broad market exposure. While this composition aligns well with a balanced investment strategy, it is heavily weighted towards U.S. equities. Comparing this with a typical diversified benchmark, the portfolio is less diversified geographically, which may limit exposure to international growth opportunities.
Growth
Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 11.79%. This return is impressive, considering the broad market exposure and low cost of the ETFs. However, the portfolio experienced a maximum drawdown of -34.74%, showing vulnerability during market downturns. Comparing this performance to a benchmark, it suggests the portfolio has captured significant market upside but is susceptible to large market swings, which is typical for equity-heavy investments.
Projection
Forward-looking projections using Monte Carlo simulations show a wide range of potential outcomes. With 1,000 simulations, the portfolio's annualized return is estimated at 10.48%. The 5th percentile projects a modest 5.8% return, while the median (50th percentile) suggests a 231.3% return over the investment horizon. Monte Carlo simulations are useful for understanding potential risks and rewards, though they rely on historical data, which may not predict future performance accurately.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is heavily weighted in stocks, accounting for 99% of the allocation, with a minimal 1% in cash. This allocation provides significant growth potential but also increases exposure to market volatility. In comparison to a balanced benchmark, which might include bonds or other asset classes, the portfolio lacks fixed income exposure, which could provide a buffer during market downturns. Adding other asset classes could enhance diversification and reduce overall risk.
Sectors
- Technology 28%
- Financials 15%
- Consumer Discretionary 11%
- Health Care 10%
- Industrials 10%
- Telecommunications 8%
- Consumer Staples 5%
- Energy 4%
- Basic Materials 3%
- Real Estate 3%
- Utilities 3%
Sector allocation shows a concentration in technology (28%), followed by financial services (15%) and consumer cyclicals (11%). This tech-heavy allocation could lead to higher volatility, especially during interest rate changes. The portfolio's sector distribution aligns with common benchmarks, suggesting a well-diversified approach across various industries. However, monitoring sector trends and adjusting allocations as needed could help manage risk and capitalize on emerging opportunities.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
The portfolio is predominantly focused on North America (81%), with limited exposure to other regions. This geographic concentration could expose the portfolio to U.S. market-specific risks, such as economic downturns or policy changes. Compared to global benchmarks, the portfolio underweights emerging markets, which might offer higher growth potential. Increasing international exposure, particularly in emerging markets, could enhance diversification and reduce reliance on the U.S. economy.
Market capitalization
- Mega-cap 41%
- Large-cap 31%
- Mid-cap 19%
- Small-cap 6%
- Micro-cap 2%
The portfolio is well-diversified across market capitalizations, with 41% in mega-cap, 31% in big-cap, and smaller allocations in medium, small, and micro-cap stocks. This distribution provides a balanced exposure to different company sizes, capturing growth from both large, established companies and smaller, potentially faster-growing firms. However, the lower allocation to small and micro-cap stocks may limit potential high-growth opportunities, which could be considered for a more aggressive growth strategy.
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 could potentially be optimized using the Efficient Frontier concept, which seeks the best risk-return trade-off by adjusting allocations between existing assets. Given the current structure, there may be limited room for improvement without introducing new asset classes. However, small tweaks in the allocation between U.S. and international equities could enhance the risk-return profile. It's important to remember that optimization is based on historical data and may not guarantee future success.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Vanguard Total International Stock Index Fund ETF Shares 3.20%
- Weighted yield (per year) 1.68%
The portfolio's dividend yield is 1.68%, with the international ETF contributing a higher yield of 3.20%. Dividends can provide a steady income stream, which is beneficial for investors seeking regular cash flow. However, the overall yield is modest, reflecting the growth focus of the portfolio. For income-focused investors, exploring higher-yielding assets could be advantageous. Nevertheless, the current yield aligns with the portfolio's balanced growth strategy, offering a mix of income and capital appreciation.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.04%
The portfolio benefits from impressively low costs, with an overall Total Expense Ratio (TER) of 0.04%. These low fees are a significant advantage, supporting better long-term performance by minimizing the drag on returns. Compared to industry averages, this cost structure is highly competitive, underscoring the efficiency of using broad market ETFs. Maintaining low costs is crucial for maximizing net returns, making this portfolio well-suited for cost-conscious investors.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
Compare your holdings
How much do the funds you hold actually overlap with the ones people weigh them against?
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