A balanced portfolio with strong US focus and low-cost index fund dominance

Report created on Feb 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of the Vanguard 500 Index Fund Admiral Shares, making up 80%, and the Vanguard Total International Stock Index Fund ETF Shares at 20%. This composition heavily leans toward US equities, with a minor international exposure. The portfolio aligns with a typical balanced profile, emphasizing broad diversification while maintaining a focus on large-cap stocks. This structure generally provides stability but may lack exposure to smaller, potentially higher-growth segments. Consider diversifying further by incorporating additional asset classes or regions to enhance growth potential and mitigate risks associated with heavy US reliance.

Growth Info

Historically, this portfolio has demonstrated a solid Compound Annual Growth Rate (CAGR) of 12.71%, outperforming many benchmarks. However, it also experienced a maximum drawdown of -33.76%, indicating vulnerability during market downturns. The concentrated performance over just 31 days suggests reliance on significant market events for returns. While past performance is not indicative of future outcomes, this trend highlights the portfolio's potential for strong growth, albeit with notable risk during volatile periods. Maintaining awareness of market conditions and diversifying further could help manage future drawdowns.

Projection Info

The forward projection using a Monte Carlo simulation, which evaluates potential future outcomes based on historical data, shows an annualized return of 10.87%. With 975 out of 1,000 simulations yielding positive returns, the portfolio is likely to perform well in various scenarios. However, projections are inherently uncertain and should be interpreted with caution, as they rely on past trends that may not fully capture future market dynamics. Regularly reviewing and adjusting the portfolio to align with changing market conditions can help optimize performance and manage risks.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99% of assets in equities, leaving minimal cash or other asset classes. This allocation maximizes growth potential but may increase risk, particularly in volatile markets. A more balanced approach could involve incorporating bonds or alternative investments to provide stability and income. While the current allocation aligns with a growth-oriented strategy, diversifying across asset classes could enhance risk management and provide more consistent returns over time.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Consumer Discretionary
    2%

Sector-wise, the portfolio is heavily concentrated in technology at 30%, followed by financial services and healthcare. This concentration aligns with recent market trends favoring tech growth but could lead to higher volatility, especially during interest rate changes or tech sector downturns. While the sector allocation aligns with common benchmarks, consider gradually diversifying into less represented sectors, such as utilities or real estate, to mitigate sector-specific risks and enhance overall stability.

Regions Info

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

Geographically, the portfolio is predominantly focused on North America, with 81% allocation, while Europe and Asia have minor exposures. This concentration offers stability given the US market's historical performance but limits potential gains from emerging markets. Increasing exposure to regions like Asia or Latin America could enhance diversification and capture growth opportunities in faster-growing economies. Balancing geographic exposure can reduce potential risks associated with regional economic downturns and political events.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio is skewed towards mega and big-cap stocks, comprising 80% of the allocation. This focus provides stability and lower volatility but may limit exposure to the high-growth potential of small and medium-cap stocks. Incorporating a more balanced market capitalization approach could enhance diversification and capture potential gains from smaller companies. Adjusting the allocation to include a mix of market caps can improve overall risk-adjusted returns and resilience in different market conditions.

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 could potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. While your current allocation is already efficient in terms of low costs and diversification, slight adjustments in asset weights could further enhance returns without significantly increasing risk. Regularly reviewing the portfolio's position on the Efficient Frontier can help maintain an optimal balance between risk and reward, ensuring alignment with financial goals.

Dividends Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield stands at 1.60%, with the Vanguard Total International Stock Index Fund ETF Shares contributing a higher yield of 3.20%. Dividends can provide a steady income stream, which is particularly valuable for investors seeking income in addition to capital gains. While the current yield is moderate, exploring opportunities to increase dividend-paying assets could enhance income potential. Balancing growth and income-focused investments can cater to varying financial goals and enhance overall portfolio resilience.

Ongoing product costs Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.05%. These minimal expenses support better long-term performance by preserving more of the investment returns. Low costs are a significant advantage, contributing to compounding growth over time. Maintaining this cost advantage is crucial, so regularly reviewing and comparing fund expenses can ensure continued cost-effectiveness. Exploring similar low-cost options can further optimize the portfolio without sacrificing returns.

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