A balanced portfolio with a strong focus on US equities and moderate risk exposure

Report created on Jan 19, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio primarily consists of equities, with a significant 70% allocation to the Vanguard S&P 500 ETF. It includes a 10% allocation to the Vanguard Total Bond Market Index Fund ETF, providing a balance between growth and stability. The remaining 20% is split between the VanEck Semiconductor ETF and the Vanguard Total International Stock Index Fund ETF, offering some exposure to international markets and specific sectors. Compared to a typical balanced portfolio, this one leans heavily towards equities, which can drive higher returns but also increases risk. Consider adjusting the bond allocation if more stability is desired.

Growth Info

The portfolio has demonstrated strong historical performance, with a CAGR of 13.45%. Such growth indicates a successful past investment strategy, outperforming many traditional benchmarks. However, it's important to remember that past performance does not guarantee future results. The max drawdown of -31.37% highlights potential volatility, which could be concerning during market downturns. To mitigate this, consider increasing diversification or adding defensive assets to cushion against future declines.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes. With 1,000 simulations, the portfolio's median end value indicates a 361.66% increase, while the 5th percentile suggests a 26.65% gain. This demonstrates both the potential for significant growth and the inherent uncertainty. Remember, these projections rely on historical data and assumptions, which may not fully capture future market conditions. To manage expectations, regularly review and adjust the portfolio based on changing market trends and personal goals.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio is heavily weighted towards stocks, comprising 89.64% of the total allocation. Bonds make up just under 10%, offering some diversification and stability. Compared to typical balanced portfolios, this allocation is more aggressive, focusing on growth rather than income or stability. While this can lead to higher returns, it also increases exposure to market volatility. To enhance diversification, consider incorporating more bonds or alternative assets that can provide a hedge during market downturns.

Sectors Info

  • Technology
    34%
  • Financials
    12%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is heavily concentrated in the technology sector, which makes up 34.19% of the allocation. This focus can drive significant growth during tech booms but also exposes the portfolio to higher volatility, especially during interest rate hikes or tech downturns. Other sectors, such as financial services and consumer cyclicals, are represented but to a lesser extent. To reduce sector-specific risk, consider diversifying into underrepresented sectors, which can provide balance and potentially reduce volatility.

Regions Info

  • North America
    78%
  • Europe Developed
    5%
  • Asia Developed
    2%
  • Asia Emerging
    2%
  • Japan
    2%

With 78.38% of the portfolio allocated to North American assets, there's a strong home bias present. While this aligns with the investor's region, it limits exposure to international growth opportunities. The remaining geographic allocation is spread thinly across Europe, Asia, and other regions, which may not provide sufficient diversification. To enhance global diversification, consider increasing exposure to emerging markets or other developed regions, which can offer growth potential and reduce reliance on the North American market.

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 along the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve a balance where returns are maximized for a given level of risk. While this optimization focuses on existing assets, it doesn't necessarily address diversification or other strategic goals. Regularly reassess the portfolio's alignment with personal objectives and risk tolerance, making adjustments as needed to maintain optimal performance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.59%

The portfolio's dividend yield is 1.59%, with contributions primarily from the Vanguard Total Bond Market Index Fund ETF and the Vanguard Total International Stock Index Fund ETF. While not a primary focus, dividends can provide a steady income stream, particularly in volatile markets. For investors seeking more income, consider increasing allocations to higher-yielding assets. However, ensure that any changes align with broader investment goals and risk tolerance, as high yields can sometimes indicate higher risk.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the cost-efficient Vanguard ETFs. Low costs are beneficial for long-term performance, as they minimize the drag on returns. Compared to industry averages, this portfolio is well-positioned in terms of cost efficiency. Continue to monitor expense ratios, especially if considering new investments, to maintain this advantage. Lowering costs further, if possible, can enhance net returns over time.

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