A balanced portfolio with strong US focus and low-cost diversified ETFs

Report created on Jan 15, 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 70% in the Vanguard Total Stock Market ETF. Bonds make up 15%, and international stocks also hold a 15% share. This composition reflects a balanced approach, aiming for growth while managing risk through diversification. It's more equity-heavy than a typical balanced portfolio, which usually leans towards a 60/40 split between stocks and bonds. Such a setup can offer higher growth potential but also increases exposure to market volatility. Consider whether this higher equity allocation aligns with your risk tolerance and investment goals.

Growth Info

With a historical CAGR of 10.79%, the portfolio has demonstrated strong past performance, outperforming many balanced funds. However, it also faced a significant max drawdown of -31.27%, highlighting its vulnerability during market downturns. This performance pattern is typical for equity-heavy portfolios, which can offer higher returns but also experience greater volatility. While past performance can provide insights, it's important to remember that it doesn't guarantee future results. Regularly reviewing performance relative to your goals can help ensure the portfolio remains aligned with your expectations.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 scenarios. The median outcome suggested a 150.36% growth, while the worst-case (5th percentile) projected a -7.19% decline. This method uses historical data to model potential future outcomes, providing a range of possibilities rather than a single forecast. While these projections offer a glimpse into potential future performance, they rely on historical trends, which may not always predict future results accurately. Regularly revisiting these projections can help in adjusting strategies based on changing market conditions.

Asset classes Info

  • Stocks
    85%
  • Bonds
    15%
  • Cash
    1%

The portfolio's asset allocation is predominantly in stocks at 84.5%, with bonds making up 14.8%. This skew towards equities suggests a focus on growth, typical for investors with a moderate to high-risk tolerance. Compared to common benchmarks, this allocation is more aggressive than a typical balanced portfolio, which often holds closer to 60% in equities. While this can enhance growth potential, it also increases sensitivity to market fluctuations. Ensuring that this allocation aligns with your investment horizon and risk appetite is crucial for maintaining a balanced approach.

Sectors Info

  • Technology
    24%
  • Financials
    13%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation shows a significant concentration in technology at 23.5%, followed by financial services and healthcare. This concentration can lead to higher volatility, especially during sector-specific downturns. Compared to common benchmarks, the tech-heavy allocation aligns with broader market trends but may expose the portfolio to sector-specific risks. Diversifying further across sectors could mitigate these risks and provide more stability. Regularly reviewing sector performance and trends can help in making informed adjustments to maintain a balanced exposure.

Regions Info

  • North America
    71%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 70.9%, with limited exposure to emerging markets. This focus on North America aligns with many US-based investors' preferences but may limit diversification benefits. A more geographically diverse portfolio could reduce region-specific risks and enhance growth opportunities. Adding exposure to underrepresented regions like emerging markets might provide additional growth potential. Ensuring that geographic allocation aligns with your risk tolerance and investment goals is essential for achieving a well-rounded portfolio.

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 can be optimized using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. This involves adjusting allocations to achieve the most efficient mix of risk and return. While this optimization focuses on maximizing returns for a given level of risk, it doesn't necessarily address diversification or other investment goals. Regularly reviewing and adjusting the portfolio to maintain its position on the Efficient Frontier can help in achieving optimal performance while staying aligned with your risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.98%

The portfolio's total dividend yield stands at 1.98%, with contributions from both stock and bond ETFs. This yield offers a modest income stream, complementing growth potential. For investors seeking regular income, dividends can play a crucial role in total returns. While not the primary focus of this portfolio, dividends can provide a buffer during market volatility. Considering whether this yield meets your income needs is important, especially if you rely on dividends as a part of your overall investment strategy.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • 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's total expense ratio (TER) is impressively low at 0.04%, reflecting the use of cost-effective Vanguard ETFs. Low costs are crucial for enhancing long-term returns, as they reduce the drag on performance. Compared to industry averages, this TER is highly competitive, supporting better net returns over time. Regularly reviewing costs and exploring lower-cost alternatives can further optimize performance. Ensuring that costs remain aligned with your investment strategy is essential for maximizing portfolio efficiency.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey