A balanced portfolio with a strong US focus and potential for steady growth

Report created on Jan 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of four main ETFs, with a heavy emphasis on equities, accounting for 80% of the allocation. It includes a broad exposure to the US market, international stocks, bonds, and real estate. This structure aligns with a typical balanced portfolio, offering both growth and income potential. The allocation is tilted towards equities, which is common for investors seeking moderate growth with some income stability. To ensure continued alignment with personal goals, consider periodic rebalancing to maintain the desired risk level.

Growth Info

Historically, the portfolio has displayed a solid Compound Annual Growth Rate (CAGR) of 9.64%, indicating robust performance over time. However, it also experienced a significant maximum drawdown of -32.65%, reflecting potential volatility. This historical performance suggests that the portfolio can deliver strong returns but may also face substantial fluctuations during market downturns. While past performance does not guarantee future results, understanding these trends can help manage expectations and prepare for market volatility.

Projection Info

Forward projections using Monte Carlo simulations show varied outcomes, with a median return of 125.66% and a 5th percentile value of -19.77%. This method uses historical data to model potential future returns, offering a range of possible scenarios. It's important to note that these simulations are not predictions but rather a way to understand potential risks and rewards. With 894 out of 1,000 simulations yielding positive returns, the portfolio shows a good probability of growth, though it's crucial to remain aware of inherent uncertainties.

Asset classes Info

  • Stocks
    79%
  • Real Estate
    10%
  • Bonds
    10%
  • Cash
    1%

The portfolio's asset class allocation includes stocks (79.3%), bonds (9.8%), and real estate (10%). This mix provides a diversified exposure across different asset classes, reducing risk through varied income sources. Compared to common benchmarks, the allocation is well-balanced, although slightly equity-heavy, which could enhance growth potential. Diversification across asset classes helps mitigate risk and can improve overall portfolio stability. Regularly reviewing asset class allocation ensures it remains aligned with evolving financial goals and market conditions.

Sectors Info

  • Technology
    19%
  • Financials
    13%
  • Real Estate
    12%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%

Sector-wise, the portfolio is diversified, with notable exposure to technology (19.3%), financial services (13%), and real estate (12.3%). This sectoral balance aligns well with common benchmarks, providing a broad exposure to various economic segments. Such diversification can protect against sector-specific downturns, while also capturing growth in leading industries. However, technology's higher allocation may introduce increased volatility, especially in changing interest rate environments. Periodic sector reviews can help maintain a balanced approach and adjust to market shifts.

Regions Info

  • North America
    62%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (62.2%), with limited exposure to emerging markets. This allocation reflects a strong focus on developed markets, offering stability but potentially missing out on higher growth opportunities in emerging regions. While the North American focus aligns with many benchmarks, diversifying further into underrepresented regions could enhance growth potential and mitigate regional risks. Evaluating geographic exposure regularly ensures alignment with global economic trends and personal investment objectives.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This optimization involves adjusting allocations to achieve maximum returns for a given risk level. While the portfolio is already well-diversified, exploring slight allocation shifts could enhance efficiency. It's important to remember that optimization is based on historical data and assumptions, so regular reviews are essential to adapt to changing market conditions and personal risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Real Estate Index Fund ETF Shares 3.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.42%

The portfolio offers an average dividend yield of 2.42%, contributing to total returns through income. This yield is supported by the bond and real estate components, which offer higher yields of 3.7% and 3.8%, respectively. Dividends provide a steady income stream, which can be particularly appealing for investors seeking regular cash flow. While dividends enhance stability, they may not be the primary focus for growth-oriented investors. Regularly reviewing dividend contributions ensures they align with income needs and overall investment strategy.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • 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) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, minimizing costs and enhancing long-term returns. Low fees are crucial in preserving investment gains, as high costs can erode returns over time. This cost efficiency aligns well with best practices, ensuring more of the portfolio's returns are retained. Continuously monitoring expense ratios and seeking cost-effective investment options can further optimize performance and support financial goals.

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