A balanced portfolio with strong US exposure and moderate international diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a medium to long-term horizon. It emphasizes US equities while maintaining some international exposure, making it ideal for those comfortable with market fluctuations. The focus on low-cost ETFs and a blend of growth and stability aligns with a strategy aimed at consistent returns over time. Investors looking to build wealth while managing risk would find this portfolio appealing.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    70.00%
  • iShares® 0-3 Month Treasury Bond ETF
    SGOV - US46436E7186
    20.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    10.00%

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up 70% of the allocation. This dominance in large-cap US equities provides stability but limits diversification. The iShares® 0-3 Month Treasury Bond ETF, at 20%, offers liquidity and safety, while the Vanguard Total International Stock Index Fund ETF Shares at 10% adds international exposure. Compared to a typical balanced portfolio, this allocation leans towards equities, which might increase potential returns but also risk. Consider increasing international exposure for more balanced diversification.

Growth Info

Historically, the portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 13.67%, outperforming many benchmarks. However, it experienced a maximum drawdown of -21.39%, indicating potential vulnerability in downturns. The concentrated S&P 500 exposure likely contributed to both high returns and volatility. While past performance is not a guarantee of future results, maintaining a diversified strategy could help mitigate future drawdowns. Monitoring the balance between risk and return is essential for long-term success.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, indicate a wide range of potential returns. The portfolio's 5th percentile projection is 44.41%, while the 50th and 67th percentiles are 257.1% and 348.04%, respectively. These simulations suggest a high probability of positive returns, with 994 out of 1,000 simulations showing gains. While useful, it's important to remember that these projections are based on historical trends and assumptions, which may not hold true in the future. Regularly revisiting assumptions and adjusting allocations can help align with changing market conditions.

Asset classes Info

  • Stocks
    80%
  • Cash
    20%
  • Other
    0%
  • No data
    0%

The portfolio's asset allocation primarily consists of stocks (79.65%) and cash (20.34%). This mix offers a blend of growth potential and stability but leans heavily towards equities. Compared to a typical balanced portfolio, which might include bonds or alternative investments, this allocation could be more volatile. Diversifying further into other asset classes like bonds could help reduce risk and improve the risk-return profile. Balancing asset classes to align with risk tolerance and investment goals is crucial for long-term success.

Sectors Info

  • Technology
    24%
  • 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 sector allocation is led by technology at 24.19%, followed by financial services and consumer cyclicals. This concentration in tech could lead to higher volatility, especially during interest rate hikes. While the sector allocation aligns with common benchmarks, adding exposure to underrepresented sectors like real estate or utilities could enhance diversification. Balancing sector allocations can mitigate sector-specific risks and improve resilience against market fluctuations.

Regions Info

  • North America
    70%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    0%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

The portfolio's geographic exposure is heavily tilted towards North America at 70.43%, with minimal allocations to other regions. This concentration may limit diversification benefits and expose the portfolio to regional risks. Compared to global benchmarks, the underrepresentation in regions like Europe, Asia, and emerging markets suggests an opportunity for greater geographic diversification. Increasing exposure to international markets can enhance growth potential and reduce reliance on any single region.

Dividends Info

  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.20%

The portfolio's overall dividend yield is 2.2%, with contributions from all three ETFs. The iShares® 0-3 Month Treasury Bond ETF offers a notable 5.1% yield, adding income stability. Dividends can provide a steady income stream, which is beneficial for reinvestment or income purposes. Evaluating the role of dividends in your investment strategy can help optimize returns and align with financial goals.

Ongoing product costs Info

  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

With a Total Expense Ratio (TER) of 0.04%, the portfolio's costs are impressively low, supporting better long-term performance. Low costs mean more returns are retained, which can significantly impact growth over time. Continuously monitoring costs and exploring lower-cost alternatives, if available, can enhance net returns. Keeping expenses in check is a smart strategy for maximizing investment outcomes.

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.

The current portfolio could potentially be optimized for a better risk-return ratio, known as the Efficient Frontier. An optimized portfolio with the same risk level offers an expected return of 2.67%, higher than the current expectation. Adjusting allocations within the existing assets could improve efficiency, though this doesn't guarantee diversification. Regularly reviewing the portfolio's efficiency can help ensure it remains aligned with financial objectives.

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