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A broadly diversified portfolio with a balanced risk profile and strong historical returns

Report created on Apr 14, 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 composed of 99% stocks and 1% cash, with a focus on ETFs, including Vanguard and Invesco products. The largest holding, Vanguard Total Stock Market Index Fund ETF, comprises 45% of the portfolio. This structure aligns with balanced investment strategies, offering broad diversification across global equities. It mirrors a typical benchmark, providing exposure to various sectors and geographies. While the portfolio is well-diversified, the heavy stock allocation may expose it to market volatility. Consider incorporating alternative assets or fixed income to reduce risk, especially if seeking more stability during downturns.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.38%, indicating strong performance over time. This growth rate outpaces many traditional benchmarks, reflecting effective asset selection and allocation. However, the portfolio also experienced a maximum drawdown of -25.54%, highlighting potential risk during market downturns. While past performance is not indicative of future results, maintaining a diversified approach can help manage volatility. Regularly reviewing asset allocation and rebalancing can help sustain growth while mitigating risk.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes by using historical data. With 1,000 simulations, the portfolio's expected annualized return is 13.48%. The median scenario projects a 383.5% return, though results can vary widely. While simulations offer valuable insights, they rely on past data and assumptions, which may not predict future market conditions. Consider using these projections to inform strategic decisions, but remain flexible to adapt to changing markets. Regularly updating simulations with current data can enhance their relevance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is heavily skewed towards stocks, with minimal cash holdings. This composition suggests a focus on growth over income or stability. Such an allocation can potentially deliver higher returns but also increases exposure to market fluctuations. Compared to typical benchmarks, the lack of fixed income or alternative investments may limit diversification benefits. To enhance resilience, consider introducing bonds or real assets, which can provide a buffer during market downturns and contribute to a more balanced risk-return profile.

Sectors Info

  • Technology
    25%
  • Financials
    24%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a concentration in technology (25%) and financial services (24%), with other sectors like consumer cyclicals and healthcare also represented. This sectoral mix aligns with common benchmarks, offering diversification across industries. However, the tech-heavy focus may lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. Consider monitoring sector trends and adjusting allocations as needed to maintain balance. Diversifying further into underrepresented sectors could enhance stability and reduce sector-specific risks.

Regions Info

  • North America
    73%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is predominantly in North America (73%), with lesser exposure to Europe and Asia. This concentration aligns with many U.S.-focused benchmarks but may limit international diversification. Over-reliance on a single region can increase vulnerability to local economic downturns. Consider increasing exposure to emerging markets or other regions to capture global growth opportunities and reduce regional risk. Regularly assessing geopolitical developments and economic conditions can inform geographic allocation adjustments.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    28%
  • Mid-cap
    16%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is weighted towards large-cap stocks, with 49% in mega-cap and 28% in big-cap companies. This focus on larger companies offers stability and liquidity but may limit growth potential compared to smaller-cap stocks. While the allocation aligns with typical benchmarks, incorporating more mid and small-cap stocks could enhance diversification and growth potential. Balancing market capitalization exposure can help capture opportunities across different company sizes and economic cycles.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly the Vanguard Total World Stock Index Fund ETF and the Vanguard Total Stock Market Index Fund ETF. High correlation means these assets often move in tandem, reducing diversification benefits. During market downturns, correlated assets may exacerbate losses. To enhance diversification, consider replacing one of these ETFs with a less correlated asset. This adjustment can improve risk management and potentially enhance returns by smoothing portfolio volatility.

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.

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The portfolio could be optimized using the Efficient Frontier, a concept that seeks the best risk-return balance. Currently, the portfolio's expected return is lower than the optimal portfolio's 21.75% return. By adjusting asset allocation to reduce correlations and enhance diversification, the portfolio can achieve a more favorable risk-return ratio. This approach focuses on maximizing returns for a given level of risk, rather than pursuing diversification alone. Regularly reviewing and adjusting allocations can help maintain efficiency.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.77%

The portfolio's dividend yield is 1.77%, with contributions from various ETFs. While not a primary income strategy, dividends provide a steady income stream and can enhance total returns. For investors seeking income, focusing on high-yielding assets or dividend growth stocks could increase cash flow. However, it's important to balance yield with growth potential and risk. Regularly reviewing dividend policies and yields can ensure alignment with income goals and overall portfolio strategy.

Ongoing product costs Info

  • Invesco NASDAQ 100 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) 0.05%

The portfolio's total expense ratio (TER) is 0.05%, reflecting low costs that support long-term performance. Low fees are crucial for maximizing net returns, as they reduce the drag on investment growth. This cost efficiency aligns with best practices and enhances the portfolio's appeal. While costs are already optimized, regularly reviewing fee structures and exploring lower-cost alternatives can further improve net returns. Maintaining cost discipline is essential for achieving long-term investment goals.

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