Balanced Portfolio with Broad Diversification and Low Costs Offers Moderate Risk and Solid Growth Potential

Report created on Dec 2, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of two main positions: Vanguard S&P 500 ETF at 67% and Vanguard Total International Stock Index Fund ETF Shares at 33%. This allocation provides exposure to both domestic and international markets, ensuring a balanced approach to diversification. Such a composition is significant as it allows for growth potential while managing risk through diversification. To enhance the portfolio, maintaining a balanced allocation between domestic and international assets is essential, as it can help mitigate market volatility and capitalize on global economic trends.

Growth Info

Historically, the portfolio has shown a solid performance with a compound annual growth rate (CAGR) of 11.55%, reflecting the strength of its underlying assets. The max drawdown of -33.86% indicates the level of risk involved, highlighting the importance of understanding market fluctuations. This performance is crucial as it provides insights into the potential returns and risks associated with the portfolio. To sustain this growth, it's advisable to regularly review the portfolio's performance and adjust allocations to align with long-term investment goals and risk tolerance.

Projection Info

The forward projection using a Monte Carlo simulation, which involves running numerous simulations to estimate potential outcomes, shows an annualized return of 10.84%. With a 50th percentile end portfolio value of 255.99%, the projections suggest a favorable growth trajectory. This simulation is relevant as it helps in understanding the range of possible future outcomes and the associated probabilities. To optimize these projections, maintaining a diversified allocation and regularly reviewing the portfolio's alignment with financial goals and risk appetite is recommended.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily skewed towards stocks, with 99.45% allocated to equities, indicating a high-risk, high-reward profile. This asset class concentration is significant as it can lead to increased volatility but also offers greater growth potential. To manage risk, consider gradually incorporating other asset classes like bonds, which can provide stability and reduce overall portfolio volatility. Balancing asset classes according to risk tolerance and investment objectives can enhance the portfolio's resilience against market fluctuations.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    3%

The portfolio is well-diversified across various sectors, with significant allocations in Technology (26.41%), Financial Services (15.45%), and Healthcare (10.53%). This sector allocation is important as it allows for capturing growth opportunities across different economic segments. However, it's crucial to monitor sector performance and adjust allocations to avoid overexposure to any single sector. Regularly reviewing sector allocations can help in capitalizing on emerging trends and ensuring a balanced exposure to different industries.

Regions Info

  • North America
    69%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America (69.17%), with additional exposure to Europe Developed (13.09%) and Asia Emerging (5.41%). This geographic composition is relevant as it provides a diversified exposure to both developed and emerging markets, which can enhance growth potential. To further diversify, consider exploring additional regions that offer growth opportunities and align with the overall investment strategy. Ensuring a balanced geographic allocation can help in mitigating risks associated with regional economic fluctuations.

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 optimization chart suggests that while the current allocation is balanced, there is room for improvement. By moving along the efficient frontier, one can achieve a riskier or more conservative portfolio. To optimize, consider adjusting the allocation between equities and other asset classes like bonds to better align with risk tolerance and financial goals. This approach can enhance the portfolio's risk-return profile, ensuring a more efficient allocation of assets. Focus on achieving a balance that aligns with long-term objectives and risk appetite.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.79%

The portfolio offers a modest dividend yield of 1.79%, with the Vanguard S&P 500 ETF yielding 1.2% and the Vanguard Total International Stock Index Fund ETF Shares yielding 3.0%. This dividend yield is relevant as it provides a steady income stream, which can be reinvested to enhance returns. To optimize dividend income, consider focusing on dividend growth strategies that align with long-term financial objectives. Regularly reviewing dividend yields and reinvestment strategies can help in maximizing income and compounding returns over time.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio has low costs, with a total expense ratio (TER) of 0.05%, reflecting the cost-effectiveness of the chosen ETFs. Low costs are significant as they enable more of the investment returns to be retained, enhancing overall portfolio performance. To maintain cost efficiency, continue prioritizing low-cost investment options and regularly reviewing expense ratios. Keeping investment costs low is essential for maximizing returns, especially over the long term, as it can significantly impact the compounding effect on the portfolio's growth.

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