A globally diversified single ETF portfolio with a balanced risk profile

Report created on Apr 8, 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 composed entirely of the Vanguard Total World Stock Index Fund ETF, representing a 100% allocation to this single ETF. This provides broad exposure across global equities, simplifying the investment approach. While it offers ease of management and broad market participation, the lack of additional asset classes like bonds or alternatives may limit risk mitigation during market downturns. Diversifying across different asset classes could enhance stability and reduce potential volatility, aligning with the balanced risk profile.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 8.79%, indicating robust returns over time. This performance is notable for a globally diversified equity ETF, though it's essential to remember that past performance doesn't guarantee future results. The maximum drawdown of -34.26% highlights the potential for significant declines during market downturns. To mitigate such risks, consider diversifying with less volatile asset classes, which can stabilize returns during turbulent periods.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's potential future outcomes were projected based on historical data. The simulation indicates a 67th percentile outcome of 284.1%, suggesting high growth potential, though the 5th percentile shows a possible -5.7% decline. While simulations provide valuable insights, they rely on historical data and assumptions, so actual future performance may vary. Regularly reviewing and adjusting the portfolio can help manage risks and align with changing market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards equities, with 99% in stocks and 1% in cash. This allocation aligns with a growth-focused strategy but may expose the portfolio to higher volatility. A more diversified mix including bonds or alternative investments could enhance risk management and provide more consistent returns. Balancing equity exposure with other asset classes can help achieve a more stable performance, especially in uncertain market environments.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation is diverse, with the highest concentration in technology at 24%, followed by financial services at 17% and consumer cyclicals at 11%. This exposure reflects a balanced sectoral approach, though the tech-heavy allocation may lead to increased volatility during interest rate hikes. Monitoring sector trends and rebalancing as needed can ensure the portfolio remains aligned with market conditions and investment objectives.

Regions Info

  • North America
    66%
  • Europe Developed
    15%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is predominantly in North America at 66%, with significant exposure to Europe Developed and Asia Emerging. This broad geographic diversification helps mitigate region-specific risks and captures global growth opportunities. However, the heavy North American weighting might limit benefits from emerging market growth. Regularly reviewing geographic allocations and adjusting to include more emerging markets could enhance diversification and potential returns.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization is well-distributed, with 42% in mega-cap stocks, 31% in big caps, and 19% in medium caps. This distribution provides a balance between stability and growth potential. While mega-cap stocks offer stability, smaller caps can drive growth, albeit with higher volatility. Ensuring a balanced exposure across different market caps can optimize the risk-return profile and capture opportunities across various economic cycles.

Dividends Info

  • Vanguard Total World Stock Index Fund ETF Shares 2.20%
  • Weighted yield (per year) 2.20%

With a dividend yield of 2.20%, the portfolio provides a moderate income stream alongside capital appreciation. Dividends can be an essential component of total returns, especially during periods of market volatility. Reinvesting dividends can enhance compounding effects over time, while maintaining a focus on dividend growth stocks could further boost income potential. Balancing growth and income objectives will ensure a well-rounded investment approach.

Ongoing product costs Info

  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.07%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.07% for the Vanguard Total World Stock Index Fund ETF. This low-cost structure supports better long-term performance by minimizing fees that can eat into returns. Keeping costs low is crucial for maximizing net returns, so it's advisable to continue monitoring expense ratios and exploring cost-effective investment options that align with your financial goals.

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