Balanced portfolio with a strong focus on US equities and moderate international exposure

Report created on Mar 6, 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 primarily composed of ETFs, with a significant 50% allocation to the Vanguard S&P 500 ETF. This is complemented by a 20% stake in the Invesco NASDAQ 100 ETF and another 20% in the Vanguard Total International Stock Index Fund ETF Shares. The Vanguard Small-Cap Value Index Fund ETF Shares make up the remaining 10%. This structure suggests a focus on large-cap US equities with some diversification into international and small-cap stocks. Compared to a typical balanced benchmark, this portfolio is heavily weighted toward US equities, which can lead to higher returns but also increased vulnerability to US market fluctuations.

Growth Info

Historically, the portfolio has demonstrated strong performance with a Compound Annual Growth Rate (CAGR) of 13.46%. This indicates robust growth over time, outperforming many traditional benchmarks. However, it also experienced a maximum drawdown of -26.22%, highlighting potential volatility during market downturns. The fact that 90% of returns were achieved on just 19 days underscores the importance of staying invested to capture these critical periods of growth. While past performance is promising, it's essential to remember that it doesn't guarantee future results.

Projection Info

Forward projections using Monte Carlo simulations provide a range of potential outcomes based on historical data. The analysis indicates a 5th percentile outcome of a 69.1% return and a 67th percentile of 593.9%, suggesting a wide range of possible future performance. The annualized return across simulations is 13.94%, highlighting the portfolio's potential for continued growth. However, it's crucial to understand that these projections are based on past data and cannot predict future market conditions with certainty. Investors should be prepared for the inherent uncertainties of market behavior.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, comprising 99% of the total allocation, with a minimal 1% in cash. This allocation suggests a focus on growth through equity investments, which can offer higher returns over the long term but also come with increased volatility compared to a more diversified asset class mix. Compared to a typical balanced portfolio, which might include bonds or other fixed-income assets, this allocation is more aggressive. Investors should consider their risk tolerance and investment horizon when evaluating this concentration in equities.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Industrials
    9%
  • Telecommunications
    9%
  • Health Care
    9%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector-wise, the portfolio has a significant concentration in technology, accounting for 31% of the total allocation. This is followed by financial services at 13% and consumer cyclicals at 12%. Such a tech-heavy focus can lead to higher volatility, especially during periods of interest rate changes or market corrections. While technology has driven substantial growth in recent years, diversification across other sectors can help mitigate sector-specific risks. Aligning sector allocation with broader market trends and economic cycles can enhance stability and performance.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 81% exposure. This is complemented by smaller allocations in Europe Developed (8%) and Asia Emerging (3%). Such a heavy reliance on North American markets can limit diversification benefits and expose the portfolio to regional economic risks. While the US market has been a strong performer, considering increased exposure to other regions, particularly emerging markets, can provide additional growth opportunities and reduce potential risks associated with geographic concentration.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    31%
  • Mid-cap
    17%
  • Small-cap
    7%
  • Micro-cap
    1%

The portfolio's market capitalization breakdown shows a strong preference for mega-cap stocks, which constitute 43% of the allocation, followed by big-cap at 31%. Medium, small, and micro-caps make up the rest. This focus on larger companies typically provides stability and lower volatility, as these firms often have established revenue streams and market presence. However, smaller-cap stocks can offer higher growth potential over the long term. Balancing exposure across different market caps can enhance diversification and capture growth opportunities from smaller, more dynamic companies.

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 is well-positioned on the Efficient Frontier, suggesting that its current asset allocation offers an optimal risk-return balance. This means that, given the existing assets, the portfolio is structured to achieve the best possible returns for the level of risk taken. However, this optimization is based solely on the current asset mix and may not account for changes in market conditions or personal investment goals. Regularly reviewing the portfolio's alignment with the Efficient Frontier can help maintain its efficiency and adapt to evolving market dynamics.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.49%

The portfolio's total dividend yield stands at 1.49%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.10%. Dividend income can provide a steady cash flow, particularly appealing for income-focused investors. While the yield is moderate, reinvesting dividends can significantly enhance total returns over time through compounding. Investors should consider their income needs and potential tax implications when evaluating the role of dividends in their investment strategy, balancing growth and income objectives.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, with the Vanguard S&P 500 ETF offering the lowest cost at 0.03%. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. This cost efficiency aligns well with best practices in portfolio management, ensuring that more of the portfolio's returns are captured by the investor. Regularly reviewing and comparing fund fees can help maintain this advantage, ensuring that the portfolio remains cost-effective and competitive.

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