A well-diversified balanced portfolio with a focus on U.S. equities and low-cost investments

Report created on Feb 1, 2025

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 heavily weighted towards equities, with 66% in the Vanguard Total Stock Market Index Fund ETF. This is complemented by a 16% allocation to international equities, and a 9% allocation each to intermediate-term bonds and long-term treasuries. This composition broadly aligns with a balanced investment strategy, offering a mix of growth and income potential while maintaining some defensive positioning through bonds. Consider whether this equity-heavy approach aligns with your risk tolerance and investment goals, as it may expose you to higher market volatility.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 10.27%, outperforming many conservative benchmarks. However, it has experienced a maximum drawdown of -29.32%, indicating significant volatility during market downturns. This performance suggests that while the portfolio has the potential for high returns, it also carries considerable risk. Reviewing the historical performance can provide insights, but remember that past performance does not guarantee future results.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, with a median projection of 90.8% growth. The simulations predict positive returns in 874 out of 1,000 scenarios, suggesting a favorable probability of achieving gains. However, the 5th percentile projects a potential loss of -25.6%, highlighting the inherent uncertainties. Monte Carlo simulations rely on historical data, which may not fully capture future market conditions, so use these projections as a guide rather than a certainty.

Asset classes Info

  • Stocks
    81%
  • Bonds
    18%
  • Cash
    1%

The portfolio's allocation of 81% in stocks and 18% in bonds reflects a growth-oriented strategy with moderate risk. This asset class distribution is typical for balanced portfolios, aiming to capture equity growth while providing some stability through bonds. The minimal cash allocation suggests a focus on full investment rather than liquidity. Ensure this allocation aligns with your risk tolerance, as higher stock exposure can lead to more pronounced fluctuations in portfolio value.

Sectors Info

  • Technology
    23%
  • Financials
    12%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diversified, with a notable concentration in technology at 23%. This aligns with broader market trends but may lead to higher volatility during tech sector downturns. Other sectors like financial services, consumer cyclicals, and healthcare provide additional diversification. While this sector mix can capture growth opportunities, consider whether the tech-heavy tilt fits your risk profile and long-term objectives.

Regions Info

  • North America
    67%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio is predominantly exposed to North America, at 67%, with limited exposure to other regions. This concentration may benefit from the stability and growth of the U.S. market but could miss out on opportunities in emerging markets or other underrepresented regions. Consider whether increasing geographic diversification aligns with your risk appetite and desire for international exposure, particularly in regions with high growth potential.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    25%
  • Mid-cap
    16%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is skewed towards mega and big companies, which typically offer stability and established growth. This may provide a buffer against volatility compared to smaller-cap stocks. However, the lower allocation to small and micro-cap stocks might limit potential high-growth opportunities. Evaluate whether this balance is in line with your preferences for stability versus growth potential.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the mix of existing assets, you could potentially enhance returns without increasing risk. This approach focuses solely on reallocating within the current assets, rather than adding new ones. Consider whether this optimization aligns with your investment goals and risk tolerance, as it could improve overall efficiency.

Dividends Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 3.10%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.91%

The portfolio's dividend yield stands at 1.91%, with contributions from both equity and bond holdings. This yield provides a modest income stream, which can be beneficial for reinvestment or cash flow needs. The bond components, with yields over 3%, enhance this income potential. Ensure that the dividend yield aligns with your income requirements and consider reinvesting dividends to compound growth over time.

Ongoing product costs Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 0.04%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.04%. This low-cost structure supports better long-term performance by minimizing the drag on returns. Vanguard's reputation for cost-efficiency aligns well with the portfolio's objectives, allowing more of your money to remain invested. Continue to monitor costs to ensure they remain competitive and contribute positively to your investment strategy.

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