A secure and broadly diversified portfolio with a strong emphasis on low-risk assets

Report created on Apr 29, 2025

Risk profile Info

1/7
Secure
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards low-risk assets, with a significant 60% allocation in short-term Treasury Bond ETFs and an additional 20% in a moderate allocation ETF. The remaining 20% is split evenly among various stock ETFs, providing a modest exposure to equities. This composition suggests a conservative investment approach, prioritizing capital preservation over high returns. The diversification across asset classes and geographic regions is commendable, although the heavy tilt towards short-term bonds indicates a very low risk tolerance.

Growth Info

With a historical Compound Annual Growth Rate (CAGR) of 4.62% and a maximum drawdown of -9.54%, the portfolio has demonstrated resilience during market fluctuations. The days contributing most to returns highlight the portfolio's ability to capture gains in short bursts, which is typical for conservative strategies focusing on fixed income. Compared to more aggressive portfolios, the performance may seem modest, but it aligns well with the portfolio's low-risk profile.

Projection Info

Monte Carlo simulations, which use historical data to forecast a range of potential future outcomes, suggest a median growth potential of 182.7% over an unspecified period. While simulations provide useful insights, they also carry the limitation of relying on past trends, which may not always predict future performance. Nonetheless, the high count of simulations with positive returns underscores the portfolio's stability and low risk of loss.

Asset classes Info

  • Cash
    60%
  • Stocks
    23%
  • Bonds
    17%

The asset allocation leans heavily towards cash and bonds, comprising 77% of the portfolio. This allocation is consistent with a conservative investment strategy, offering stability and predictable returns. However, with 23% in stocks, the portfolio also seeks to capture some growth, balancing the low yield nature of its fixed income assets. This mix supports a risk-averse stance while allowing for some capital appreciation.

Sectors Info

  • Technology
    8%
  • Financials
    6%
  • Industrials
    4%
  • Consumer Discretionary
    4%
  • Health Care
    3%
  • Telecommunications
    3%
  • Consumer Staples
    2%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

The sectoral distribution within the equity portion is well-diversified, covering technology, financial services, industrials, and more. This diversification helps mitigate sector-specific risks and capitalize on growth across different areas of the economy. However, the overall impact of these sectors on the portfolio is limited by the relatively small allocation to equities.

Regions Info

  • North America
    21%
  • Europe Developed
    6%
  • Japan
    2%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio has a strong bias towards North America, with a 21% allocation, followed by a modest exposure to developed Europe and emerging Asian markets. This distribution reflects a conservative approach, favoring stable, developed markets over the potentially higher returns—and risks—of emerging markets. Diversifying further into underrepresented regions could enhance returns and reduce geographical risk.

Market capitalization Info

  • Mega-cap
    10%
  • Large-cap
    7%
  • Mid-cap
    4%
  • Small-cap
    1%

The allocation by market capitalization shows a preference for larger companies, which are typically more stable and less volatile than smaller firms. This aligns with the portfolio's overall conservative strategy. However, incorporating a broader mix of medium and small-cap stocks could offer higher growth potential, albeit with increased risk.

Redundant positions Info

  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The high correlation between the Vanguard Total World Stock Index Fund and the Vanguard Total Stock Market Index Fund indicates redundancy, limiting the benefits of diversification. Reducing overlap by reallocating funds from one of these ETFs into assets with lower correlation could enhance portfolio efficiency without significantly increasing risk.

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 expected return could be improved by addressing the identified asset overlap and reallocating towards slightly higher-risk, higher-return assets while maintaining the overall conservative risk profile. This optimization, aiming for an expected return of 2.72% at a minimal increase in risk, underscores the potential to enhance returns without significantly deviating from the investor's low-risk tolerance.

Dividends Info

  • iShares Core Moderate Allocation ETF 3.10%
  • iShares® 0-3 Month Treasury Bond ETF 4.80%
  • iShares 1-3 Year Treasury Bond ETF 3.90%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 4.02%

The portfolio's average dividend yield of 4.02% contributes to its total return, providing a steady income stream. This is particularly beneficial for conservative investors who value income alongside capital preservation. The yields are attractive compared to typical savings rates, highlighting the portfolio's ability to generate income while maintaining a low-risk profile.

Ongoing product costs Info

  • iShares Core Moderate Allocation ETF 0.15%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • iShares 1-3 Year Treasury Bond ETF 0.15%
  • Vanguard Total World Stock 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) 0.09%

With an average Total Expense Ratio (TER) of 0.09%, the portfolio is cost-efficient, which is critical for maximizing long-term returns, especially in a low-risk, low-return strategy. Keeping costs low ensures that a larger portion of the investment returns contributes to portfolio growth rather than being consumed by fees.

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