A highly diversified portfolio with moderate growth focus and excellent global exposure

Report created on Feb 14, 2025

Risk profile Info

4/7
Balanced
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Diversification profile Info

5/5
Highly Diversified
← Less diversification More diversification →

Positions

This portfolio is composed of a mix of Vanguard funds, with a significant 45% allocation to the Vanguard LifeStrategy Moderate Growth Fund. The Vanguard 500 Index Fund follows with 39%, providing strong large-cap exposure. The Vanguard Total International Stock Index Fund adds 14% for international diversification. Small allocations in mid- and small-cap index funds complete the mix. Compared to a benchmark, this portfolio leans towards large-cap and international stocks, which can provide stability and growth potential. This composition is well-balanced, aligning with a moderate growth strategy and providing a solid foundation for diversified investment.

Growth Info

Historically, the portfolio has delivered a CAGR of 9.11%, indicating robust growth over time. The maximum drawdown of -29.3% highlights the potential risk during market downturns. Benchmarked against similar portfolios, this performance is commendable, showing resilience and the ability to recover from market dips. The fact that 90% of returns are concentrated in just 27 days underscores the importance of staying invested to capture those critical gains. While past performance is not indicative of future results, this history suggests a well-managed portfolio that aligns with moderate growth expectations.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, provide insight into potential portfolio performance. With 1,000 simulations, the portfolio has a 50th percentile outcome of 233.6% growth, indicating a favorable median expectation. The annualized return across all simulations is 10.11%, suggesting a positive outlook. However, it's important to remember that these projections are based on historical data and cannot guarantee future results. The simulations offer a useful framework for understanding potential risks and rewards, helping investors set realistic expectations for long-term growth.

Asset classes Info

  • Stocks
    81%
  • Bonds
    18%
  • Cash
    1%

The portfolio's asset allocation is primarily in stocks (81%), with bonds making up 18% and a small 1% in cash. This mix provides a balanced exposure to growth and income-generating assets. Compared to typical benchmarks, the stock-heavy allocation supports the moderate growth objective, while the bond component offers some stability and income. This asset class distribution is well-suited for investors seeking a blend of capital appreciation and risk mitigation. Adjustments could be considered if the investor's risk tolerance or market outlook changes, but the current allocation aligns well with a balanced investment strategy.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    3%

Sector allocation is diverse, with a notable 27% in technology, followed by financial services at 16%. This tech-heavy focus may lead to higher volatility, especially during interest rate hikes. However, the inclusion of other sectors like consumer cyclical and healthcare provides balance. Compared to common benchmarks, this sector spread is reasonably aligned, offering both growth potential and risk diversification. Investors should monitor sector trends and be prepared to adjust allocations if significant economic changes occur. Overall, the sector composition supports a strategy aimed at capturing growth while managing risk.

Regions Info

  • North America
    71%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 71%, with Europe Developed and Asia Emerging rounding out the significant exposures. This allocation provides a strong foundation in stable, developed markets while allowing for growth opportunities in emerging regions. Compared to benchmarks, the portfolio's geographic spread is well-aligned, offering both stability and diversification. Investors should consider their views on global economic trends and adjust exposures accordingly. While the current allocation is prudent, increasing exposure to underrepresented regions could enhance diversification and potential returns.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    26%
  • Mid-cap
    16%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization breakdown shows a strong preference for mega (36%) and big (26%) companies, providing stability and lower volatility. Medium and small-cap allocations are present but limited, reducing exposure to higher growth and risk segments. Compared to typical benchmarks, this allocation favors larger companies, aligning with a moderate risk profile. Investors seeking higher growth might consider increasing small and medium-cap allocations, while those prioritizing stability may find the current distribution suitable. This market cap mix supports a balanced approach, focusing on steady growth with manageable risk.

Redundant positions Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES
    VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES
    VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard 500, Small-Cap, and Mid-Cap Index Funds. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. While correlation can enhance returns in a rising market, it may increase risk during declines. Investors should consider reducing overlap by diversifying into less correlated assets to enhance risk management. This approach can help maintain portfolio stability and optimize performance across varying market conditions. The current correlation pattern suggests an opportunity for strategic adjustments.

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 benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This involves adjusting allocations to maximize returns for a given level of risk. However, before optimizing, it's advisable to address the high correlation among certain assets, as diversification is key to effective risk management. By refining asset allocation and minimizing overlap, investors can enhance portfolio efficiency. This approach supports a strategy focused on achieving optimal growth while managing risk prudently.

Dividends Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 1.20%
  • VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES 1.00%
  • VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES 1.30%
  • VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES 2.80%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 3.10%
  • Weighted yield (per year) 2.18%

The portfolio's dividend yield stands at 2.18%, with the Vanguard LifeStrategy Moderate Growth and Total International Stock Index Funds contributing the most. Dividends provide a reliable income stream, enhancing total returns, especially in volatile markets. For investors seeking income, this yield is competitive compared to benchmarks, offering a balance between growth and income. It's important to note that dividends can fluctuate based on market conditions and company performance. Investors should regularly review dividend policies and consider reinvesting dividends to compound returns, supporting long-term wealth accumulation.

Ongoing product costs Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 0.04%
  • VANGUARD MID-CAP INDEX FUND ADMIRAL SHARES 0.05%
  • VANGUARD SMALL-CAP INDEX FUND ADMIRAL SHARES 0.05%
  • VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES 0.13%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.12%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, which is favorable compared to industry averages. Low costs are crucial for maximizing net returns over time, as they reduce the drag on performance. Vanguard's reputation for low-cost funds supports this efficient cost structure, aligning well with best practices for long-term investing. Investors should continue to monitor fund expenses, ensuring they remain competitive. By maintaining a focus on cost efficiency, the portfolio is well-positioned to enhance returns and support the investor's financial goals.

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