Strong value and small cap tilt using low cost index funds with a clear US home bias
Report created on May 4, 2026Risk profile
5/7
Diversification profile
3/5
Positions
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VB Vanguard Small-Cap Value Index Fund ETF Shares
VBR - US9229086114 60.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 25.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 15.00%
This portfolio is made up of just three broad stock index ETFs, with a clear anchor in US small‑cap value. Around 60% sits in the small‑cap value fund, 25% in a total US market fund, and 15% in a total international fund. So it’s 100% in equities and deliberately concentrated in one particular segment rather than spread evenly. This structure makes the overall behaviour heavily driven by smaller, cheaper‑priced companies, with the other two funds providing broader US and global exposure. A simple three‑fund setup like this is easy to understand and manage, but it does mean that any strengths or weaknesses of the small‑cap value slice will strongly influence the whole portfolio.
Growth
Over the period from 2016 to 2026, $1,000 grew to about $3,028, which works out to a Compound Annual Growth Rate (CAGR) of 11.76%. CAGR is like an average yearly “cruise speed” for returns over the whole trip. This lagged both the US market index (15.25%) and the global market index (12.66%). The portfolio also saw a deeper drop than the benchmarks in early 2020, with a max drawdown of about -40%, compared with roughly -34% for the benchmarks. That kind of deeper dip is consistent with a heavier small‑cap and value tilt, which can be bumpier in sharp downturns even when long‑term returns are still solid.
Projection
The Monte Carlo projection uses the portfolio’s historical ups and downs to simulate many possible 15‑year paths for a $1,000 investment. Think of it as running 1,000 “what if” futures where returns change each year based on past patterns, not as a single forecast. The median outcome lands around $2,672, with most simulations falling between roughly $1,782 and $4,037. There’s about a 73% chance of finishing positive, and the average annual return across all simulations is 7.99%. These numbers give a sense of the range of potential outcomes rather than a promise. As always, simulated and historical data can’t account for every future shock or structural market change.
Asset classes
- Stocks 100%
All of this portfolio is in stocks, with 0% in bonds, cash, or other asset classes. That creates a very growth‑oriented profile, because stocks historically offer higher long‑term returns but also larger swings in value. Having only equities means there’s no built‑in dampener like bonds that typically move differently during stress periods. Compared with many broad multi‑asset benchmarks that mix stocks and bonds, this portfolio sits clearly on the higher‑risk, higher‑potential‑reward side. The growth classification and risk score of 5/7 line up logically with this all‑equity approach, and the moderate diversification score mainly reflects concentration within one asset class rather than a mixture of different ones.
Sectors
- Financials 17%
- Technology 16%
- Industrials 15%
- Consumer Discretionary 11%
- Health Care 9%
- Real Estate 7%
- Basic Materials 5%
- Energy 5%
- Telecommunications 5%
- Consumer Staples 5%
- Utilities 4%
Sector exposure is fairly balanced, even with the strong tilt to small‑cap value. Financials are the largest slice at 17%, followed by technology at 16% and industrials at 15%, with no single sector dominating the picture. Real estate, energy, and basic materials together form a meaningful chunk, while more defensive sectors like consumer staples and utilities have smaller but still present allocations. Relative to common broad‑market benchmarks, this mix looks reasonably diversified, without an extreme tech or single‑sector overweight. That balance can help smooth out sector‑specific shocks, since weakness in one area may be partly offset by strength elsewhere. It’s a positive sign that sector concentration is not the main source of risk here.
Regions
- North America 85%
- Europe Developed 6%
- Japan 2%
- Asia Developed 2%
- Asia Emerging 2%
- Latin America 1%
- Australasia 1%
- Africa/Middle East 1%
Geographically, the portfolio is clearly US‑centric. About 85% is in North America, with relatively small slices in developed Europe, Japan, and other regions, plus low single‑digit exposure to emerging markets. Compared with a global stock benchmark, which spreads more evenly across regions, this represents a noticeable home bias towards the US market and US dollar. Historically that tilt has sometimes helped and sometimes hurt, depending on the period. It also means most economic and policy risk is tied to one main region. The 15% in total international equities does add some diversification, giving exposure to different currencies, growth drivers, and interest‑rate environments, but the overall risk story remains dominated by North America.
Market capitalization
- Small-cap 36%
- Mid-cap 25%
- Mega-cap 17%
- Large-cap 13%
- Micro-cap 8%
By market capitalization, this portfolio leans heavily toward smaller companies. About 36% is in small caps and another 8% in micro caps, with mid caps at 25% and the remainder spread across large and mega caps. So while there is still plenty of exposure to big household‑name firms, the overall mix is clearly tilted away from the largest companies that dominate broad indexes. Smaller stocks can offer higher growth potential and stronger sensitivity to the economic cycle, but they also tend to be more volatile and sometimes less liquid. This helps explain why the portfolio’s swings and drawdowns can be more pronounced than those of a standard large‑cap‑heavy benchmark.
True holdings
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NV NVIDIA Corporation 1.60%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
AA Apple Inc 1.48%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
MS Microsoft Corporation 1.09%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
AM Amazon.com Inc 0.80%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
GO Alphabet Inc Class A 0.67%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
AV Broadcom Inc 0.58%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
GO Alphabet Inc Class C 0.53%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
23 Taiwan Semiconductor Manufacturing Co. Ltd. 0.52%
Part of fund(s):- Vanguard Total International Stock Index Fund ETF Shares
-
ME Meta Platforms Inc. 0.50%
Part of fund(s):- Vanguard Total Stock Market Index Fund ETF Shares
-
NR NRG Energy Inc. 0.45%
Part of fund(s):- Vanguard Small-Cap Value Index Fund ETF Shares
- Top 10 total 8.21%
Looking through to the top holdings across the ETFs, the biggest individual exposures are well‑known mega‑cap names like NVIDIA, Apple, Microsoft, Amazon, Alphabet, and Meta. Each of these appears only in modest size, all under 2% of the total portfolio, and they mostly come through the total US and total international funds. There is some overlap, especially with companies that sit in multiple indices, but because the small‑cap value ETF doesn’t hold these giants, they don’t dominate. Coverage of underlying holdings is limited to ETF top‑10 lists, so actual overlap is likely a bit higher than shown, but overall the portfolio doesn’t appear to be overly concentrated in any single company.
Factors
Factor exposure shows a very strong tilt toward size and a high tilt toward value. In this context, “size” means leaning into smaller companies, while “value” means focusing on stocks trading at cheaper prices relative to fundamentals. Factor exposure is like looking at the hidden “ingredients” that drive returns beyond just sectors or regions. With an 80% score for size and 72% for value, this portfolio is intentionally positioned away from a market‑like mix. Historically, small and value stocks have often done well over long stretches but can lag in growth‑led or mega‑cap‑driven rallies, and they can experience sharper swings during market stress, which fits with the risk and performance profile seen here.
Risk contribution
-
Vanguard Small-Cap Value Index Fund ETF Shares
Weight: 60.00% 66.2% -
Vanguard Total Stock Market Index Fund ETF Shares
Weight: 25.00% 22.2% -
Vanguard Total International Stock Index Fund ETF Shares
Weight: 15.00% 11.5%
Risk contribution shows how much each holding drives the portfolio’s overall volatility, which can differ from its weight. The small‑cap value ETF is 60% of the assets but contributes about 66% of total risk, indicating it’s a bit more volatile than the rest. The total US market ETF, at 25% weight, contributes about 22% of the risk, and the international fund, at 15% weight, adds around 12% of risk. All three together make up 100% of portfolio volatility, but the slight overweight in risk from the small‑cap value piece underscores that most of the portfolio’s ups and downs are coming from that single position, not from the broader market funds.
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 efficient frontier analysis compares the current portfolio’s risk‑return mix with the best combinations possible using the same three ETFs. The portfolio’s Sharpe ratio — a simple measure of return per unit of risk — is 0.47, while the max‑Sharpe mix reaches 0.80 and the minimum‑variance mix is 0.65. The current point sits about 2.5 percentage points below the frontier at its risk level, meaning that, in theory, different weights among these same funds could deliver either higher expected return for similar risk or lower risk for similar return. Even so, the current setup already delivers a double‑digit expected return with risk in line with a growth‑oriented, all‑equity profile.
Dividends
- Vanguard Small-Cap Value Index Fund ETF Shares 1.80%
- Vanguard Total Stock Market Index Fund ETF Shares 1.10%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.78%
The overall dividend yield for this portfolio is about 1.78%, combining 1.8% from the small‑cap value ETF, 1.1% from the total US market ETF, and 2.8% from the international ETF. Dividend yield is the annual cash payout as a percentage of the current price, like rent from owning shares. Here, income plays a supporting rather than dominant role, with most of the return historically coming from price changes. The slightly higher yield on the small‑cap value and international funds adds a bit of cushion during flat markets, but this is still primarily a growth‑driven equity portfolio rather than one focused on maximizing cash distributions.
Ongoing product costs
- Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.06%
Costs are impressively low. The total expense ratio (TER) for the portfolio is around 0.06% per year, based on 0.07% for the small‑cap value ETF, 0.03% for the total US market ETF, and 0.05% for the international ETF. TER represents the annual fee charged by the funds, taken out before performance is reported, similar to a small service fee. Keeping costs this low helps more of the portfolio’s gross return stay in the investor’s pocket, especially when compounded over many years. This alignment with best‑in‑class low‑fee index products is a real strength of the portfolio’s design.
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