A balanced portfolio with strong US focus and moderate international diversification

Report created on Dec 7, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio primarily consists of ETFs, with a significant 75% allocation to the Vanguard Total Stock Market Index Fund ETF. It also includes a 20% allocation to the Vanguard Total International Stock Index Fund ETF and a 5% allocation to the Vanguard Total Bond Market Index Fund ETF. This composition suggests a strong focus on equities, with a small portion in bonds to provide some stability. The high equity exposure indicates a growth-oriented strategy, while the inclusion of bonds helps in mitigating risks. Consider increasing the bond allocation if you desire more stability, especially in volatile markets.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 11.97%, which indicates strong past performance. However, it's important to note the maximum drawdown of -33.55%, which reflects the highest loss from peak to trough. This highlights the potential volatility in the portfolio. While historical performance can provide insights, it does not guarantee future returns. To manage risk, consider diversifying further or adjusting asset allocations during uncertain market conditions.

Projection Info

The Monte Carlo simulation used in this analysis projects potential future outcomes based on historical data. With 1,000 simulations, the median return is 156.16%, while the 5th percentile shows a potential loss of -4.5%. This method helps in understanding the range of possible future scenarios and their probabilities. However, it relies on historical data, which may not account for future market changes. Regularly review and adjust the portfolio to align with changing market conditions and personal investment goals.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio is heavily weighted towards stocks, making up approximately 94.5% of the allocation. Bonds constitute about 5%, providing limited fixed-income exposure. This skew towards equities suggests a focus on growth but also increases volatility. Diversifying into more asset classes like real estate or commodities could enhance stability and reduce risk. Consider evaluating your risk tolerance and investment goals to determine if a more balanced allocation would better suit your needs.

Sectors Info

  • Technology
    26%
  • Financials
    14%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector-wise, the portfolio has a notable concentration in technology, accounting for 25.68% of the allocation. Other significant sectors include financial services and healthcare. While this provides exposure to growth sectors, it may also increase risk if these sectors underperform. Ensuring a balanced sector allocation can help manage sector-specific risks. Consider periodically reviewing sector performance and adjusting allocations to maintain a diversified and balanced portfolio.

Regions Info

  • North America
    76%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 76.2% of the allocation. This provides strong exposure to developed markets but limits diversification across other regions. International exposure is mainly through Europe and Asia. To mitigate geographic risks and capitalize on global opportunities, consider increasing allocations to emerging markets. This could enhance diversification and potentially improve long-term returns by tapping into different economic cycles.

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 current portfolio can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the existing asset allocations, you can aim for a more efficient portfolio without adding new assets. This involves finding the optimal balance between risk and return based on the current holdings. Consider using portfolio optimization tools to explore different allocation scenarios and enhance the portfolio's efficiency. Regular reviews and adjustments can ensure alignment with your risk tolerance and investment objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.66%

The portfolio offers a total dividend yield of 1.66%, with the highest contribution from the Vanguard Total Bond Market Index Fund ETF at 3.6%. Dividends provide a steady income stream and can be reinvested to enhance returns. While the yield is modest, it complements the growth potential of the portfolio. If income generation is a priority, consider increasing allocations to higher-yielding assets. Regularly review dividend policies of holdings to ensure they align with your income objectives.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • 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's total expense ratio (TER) is 0.04%, reflecting low management fees. This cost efficiency is advantageous as it minimizes the erosion of returns over time. Lower costs can significantly impact long-term performance, especially in compounding scenarios. Continue monitoring expenses and seek opportunities to reduce costs further, perhaps by exploring other low-cost investment options. Maintaining a cost-effective portfolio will help maximize net returns and support long-term financial goals.

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