A balanced portfolio with strong domestic focus and moderate international diversification

Report created on Jan 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 99.5% in stocks, primarily through three Vanguard index funds. The Vanguard Total Stock Market Index Fund dominates with 76%, supported by the Small-Cap Value and Total International Stock Index Funds, each at 12%. This composition leans towards a broad market exposure with a slight tilt towards small-cap value and international equities. Compared to a typical balanced portfolio, this one is more equity-centric, which might increase potential returns but also elevates risk. Consider diversifying further into fixed income or alternative assets to balance the risk profile.

Growth Info

Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 12.34%. The maximum drawdown of -35.81% indicates significant volatility during downturns. This performance suggests strong growth potential, yet caution is warranted due to the risk of substantial losses in adverse market conditions. Benchmarking against similar portfolios shows competitive returns, but it's crucial to remember that past performance doesn't guarantee future results. Regularly reviewing historical performance can help in understanding risk tolerance and setting realistic expectations.

Projection Info

Utilizing Monte Carlo simulations, this portfolio's potential future performance has been modeled using 1,000 scenarios. The median projection suggests a 233.25% increase, while the best-case scenario predicts a 348.78% rise. However, there's a 5% chance of only achieving a 1.23% return. This method highlights possible outcomes based on historical data, which is inherently uncertain. While these projections offer insights, they should not be solely relied upon for decision-making. Regularly reassessing projections and adjusting the portfolio can help align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    99%

The portfolio's allocation is concentrated in equities, with minimal exposure to cash or other asset classes. This focus on stocks can drive higher returns but also increases vulnerability to market volatility. Compared to typical balanced portfolios, which include bonds or real estate, this allocation may lack defensive elements. To enhance stability, consider integrating fixed income or alternative investments. Diversifying across asset classes can mitigate risks and improve resilience during market fluctuations, aligning with a balanced investment strategy.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Real Estate
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%

The sectoral allocation is diverse, yet technology and financial services dominate with 25.89% and 15.09%, respectively. This concentration aligns with common benchmarks, providing strong growth potential, particularly in tech. However, it may also expose the portfolio to sector-specific risks, such as regulatory changes or economic shifts. Balancing sector weights can reduce these risks. Consider increasing exposure to underrepresented sectors like utilities or real estate to enhance diversification and potentially stabilize returns during sector downturns.

Regions Info

  • North America
    88%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio is heavily concentrated in North American equities, accounting for 88.39% of geographic exposure. This focus provides familiarity and stability but limits international diversification. Compared to global benchmarks, the portfolio underrepresents regions like Europe and Asia. Expanding geographic exposure can reduce regional risks and tap into growth opportunities abroad. Consider increasing investments in developed and emerging markets outside North America to enhance diversification and capture potential gains from global economic developments.

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 risk-return profile can be optimized using the Efficient Frontier, which identifies the ideal asset allocation for maximum returns at a given risk level. Current holdings may not fully utilize this potential, suggesting room for improvement. Adjusting allocations among existing assets could enhance efficiency, achieving a better balance between risk and return. Regularly reviewing and rebalancing the portfolio ensures alignment with personal goals and market conditions, optimizing performance without necessarily altering diversification.

Dividends Info

  • VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL SHARES 2.00%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 3.40%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 1.30%
  • Weighted yield (per year) 1.64%

With a total dividend yield of 1.64%, the portfolio provides modest income. The Vanguard Total International Stock Index Fund contributes the highest yield at 3.4%, enhancing cash flow. Dividends offer a steady income stream, valuable for reinvestment or supplementing income. However, the focus on growth-oriented funds may limit dividend yields. For those seeking higher income, consider increasing allocation to dividend-focused funds or stocks. Balancing growth and income can support both capital appreciation and income generation goals.

Ongoing product costs Info

  • VANGUARD SMALL-CAP VALUE INDEX FUND ADMIRAL SHARES 0.07%
  • VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND ADMIRAL SHARES 0.12%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 0.04%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.05%. This cost efficiency aligns well with long-term investment strategies, as lower fees can significantly enhance net returns over time. Compared to average fund costs, these expenses are minimal, supporting better performance. Maintaining low costs is essential for maximizing returns, so periodically reviewing and optimizing fees can ensure continued efficiency. Consider replacing higher-cost assets with similar lower-cost alternatives to preserve this advantage.

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