A balanced and highly diversified portfolio with strong exposure to global equities and bonds
Report created on Aug 8, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 40.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 30.00% -
IU iShares Core Total USD Bond Market ETF
IUSB - US46434V6130 15.00% -
VW Vanguard FTSE Emerging Markets Index Fund ETF Shares
VWO - US9220428588 15.00%
The portfolio is structured with a significant emphasis on equity ETFs, comprising 85% of the portfolio, split between U.S. and international stocks, including emerging markets. The remaining 15% is allocated to U.S. bonds, offering a blend of growth potential through equities and income plus stability through bonds. This composition aligns well with a balanced risk profile, aiming to capture global market growth while mitigating volatility through fixed income securities.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.75%, with a maximum drawdown of -29.95%. This performance indicates a robust growth trajectory, albeit with periods of significant volatility. The max drawdown figure underscores the risk of temporary but substantial declines in portfolio value, a common characteristic of equity-heavy portfolios. Comparatively, this performance suggests a healthy balance between risk and return, typical for balanced portfolios.
Projection
Forward projections, based on Monte Carlo simulations, show a wide range of possible outcomes, with a median increase of 168.8%. These simulations, which run thousands of hypothetical scenarios to predict future performance, suggest a strong likelihood of positive returns, with 95.4% of simulations ending in profit. However, it's crucial to note that these projections are based on historical data, which does not guarantee future results.
Asset classes
- Stocks 84%
- Bonds 15%
- Cash 1%
The portfolio's asset class distribution, with a dominant 84% in stocks and 15% in bonds, is designed for investors seeking growth with a moderate buffer against market downturns. This allocation is in line with balanced investment strategies, which aim to provide long-term capital appreciation and income. The small cash holding enhances liquidity, allowing for flexibility in responding to market changes or taking advantage of new investment opportunities.
Sectors
- Technology 20%
- Financials 16%
- Consumer Discretionary 9%
- Industrials 9%
- Health Care 7%
- Telecommunications 7%
- Consumer Staples 5%
- Basic Materials 4%
- Energy 3%
- Utilities 2%
- Real Estate 2%
Sector allocation is broad, with the highest concentration in technology and financial services. This sector spread is indicative of a growth-oriented strategy but also exposes the portfolio to sector-specific risks. For instance, technology stocks, while offering high growth potential, can be volatile and sensitive to market shifts. A diversified sector approach helps mitigate these risks, ensuring no single sector disproportionately impacts the portfolio's performance.
Regions
- North America 57%
- Asia Emerging 14%
- Europe Developed 12%
- Asia Developed 6%
- Japan 5%
- Africa/Middle East 3%
- Latin America 2%
- Australasia 1%
Geographic diversification is a strength of this portfolio, with significant exposure to North America, Asia Emerging, and Europe Developed markets. This global footprint not only captures growth in established markets but also taps into the dynamism of emerging economies. However, the concentration in North America suggests a home bias, common among U.S.-based investors, which could be rebalanced for broader global exposure.
Market capitalization
- Mega-cap 39%
- Large-cap 27%
- Mid-cap 14%
- Small-cap 2%
The portfolio's market capitalization exposure leans heavily towards mega and big-cap stocks, which typically offer stability and steady growth. However, this focus may limit the potential high returns associated with smaller-cap investments, which, while riskier, can provide significant growth opportunities. Including more medium to small-cap stocks could enhance growth prospects, albeit at a higher risk level.
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 current allocation appears near optimal for a balanced risk-return profile, as indicated by its historical performance and forward projections. While always room for fine-tuning exists, such as adjusting sector or geographic exposure, the portfolio is well-positioned on the Efficient Frontier, suggesting an efficient risk-return trade-off. Future adjustments should consider changing financial goals, market conditions, or risk tolerance.
Dividends
- iShares Core Total USD Bond Market ETF 4.10%
- Vanguard S&P 500 ETF 1.20%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 2.34%
The portfolio's dividend yield stands at 2.34%, a respectable figure that contributes to total return, especially in volatile or bear markets. This yield, derived from both the equity and bond components, provides a steady income stream, which can be reinvested for compounding growth or used as passive income. Considering the portfolio's balanced nature, this yield strikes a good balance between income and growth objectives.
Ongoing product costs
- iShares Core Total USD Bond Market ETF 0.06%
- Vanguard S&P 500 ETF 0.03%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.05%
With a total expense ratio (TER) of 0.05%, the portfolio is cost-efficient, minimizing the drag on returns due to fees. Lower costs are crucial for long-term investment success, as they compound over time, similar to returns. This portfolio's focus on low-cost ETFs is a best practice in portfolio construction, ensuring more of the investment's return is retained by the investor.
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