Balanced portfolio with strong US focus and moderate diversification across global equities

Report created on Dec 31, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of 50% Vanguard S&P 500 ETF, 25% Vanguard Total Bond Market Index Fund ETF Shares, 10% Vanguard Small-Cap Value Index Fund ETF Shares, 10% Vanguard Total International Stock Index Fund ETF Shares, and 5% Avantis® International Small Cap Value ETF. It leans heavily towards equities with a 75% allocation, while bonds make up 25%. Compared to a typical balanced portfolio, this composition offers a higher equity exposure, which might suit those seeking growth with moderate risk.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.03%, which is impressive for a balanced profile. The maximum drawdown of -27.69% indicates the largest peak-to-trough decline, reflecting potential volatility during market downturns. Compared to benchmarks, the performance aligns well, suggesting the portfolio has navigated market conditions effectively. However, past performance is not a guarantee of future results, so maintaining vigilance is key.

Projection Info

The forward projection using Monte Carlo simulations, which use historical data to estimate future outcomes, suggests a 50th percentile return of 203.9% and a 67th percentile return of 316.95%. With 937 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, the 5th percentile indicates potential for negative outcomes (-7.45%), highlighting the inherent uncertainty in projections. It's important to remember that simulations are based on past data and may not predict future market conditions accurately.

Asset classes Info

  • Stocks
    75%
  • Bonds
    25%
  • Cash
    1%

The portfolio's asset class allocation is primarily in stocks (74.63%) and bonds (24.63%), with minimal cash and other assets. This allocation provides a balance between growth and income, typical of a moderately diversified portfolio. Compared to benchmarks, the equity weighting is slightly higher, which could enhance returns in bullish markets but may increase volatility during downturns. A review of this balance could ensure alignment with risk tolerance and investment goals.

Sectors Info

  • Technology
    19%
  • Financials
    11%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation shows a notable concentration in Technology (18.77%) and Financial Services (11.47%), with Consumer Cyclicals and Industrials also significant. This composition is broadly aligned with benchmark sector weights, ensuring diversification. However, technology-heavy portfolios may face higher volatility during interest rate changes. Maintaining a balanced sector approach can help mitigate risks associated with sector-specific downturns and enhance stability.

Regions Info

  • North America
    61%
  • Europe Developed
    6%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio has a strong North American focus (60.88%), with limited exposure to other regions. This concentration may limit diversification benefits and increase vulnerability to regional economic shifts. Compared to global benchmarks, the geographic allocation is less diversified. Expanding exposure to underrepresented regions could enhance risk-adjusted returns and provide a buffer against localized market downturns.

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 risk vs return profile can be optimized using the Efficient Frontier, which identifies the best risk-return ratio based on current assets. This optimization focuses on reallocating existing holdings to achieve a more efficient balance. While the portfolio is already well-structured, exploring shifts within existing allocations could enhance returns without increasing risk. It's important to note that efficiency focuses on risk-return trade-offs, not diversification.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.22%

The portfolio's dividend yield stands at 2.22%, with contributions from various ETFs, including a notable 4.3% from the Avantis® International Small Cap Value ETF. Dividends can provide a steady income stream, which is appealing for income-focused investors. While the yield is moderate, reinvesting dividends can compound returns over time. Ensuring a balance between dividend yield and growth potential is crucial for achieving long-term financial goals.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, which is impressively low and supports better long-term performance. Lower costs mean more of your investment returns are retained, enhancing compounding benefits. The cost efficiency of this portfolio aligns well with best practices, ensuring that expenses do not erode potential gains. Regularly reviewing and optimizing costs can further improve net returns.

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