Balanced portfolio with strong focus on US and technology sectors and low costs

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with a moderate risk tolerance and a long-term investment horizon. It's designed for individuals comfortable with stock market exposure and the associated volatility, prioritizing capital appreciation over income. The investor likely values simplicity and low costs in their investment approach, with a preference for leveraging broad market trends rather than engaging in active stock selection.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    80.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%

The portfolio is structured around two main ETFs: 80% in a Total Stock Market Index Fund and 20% in a Total International Stock Index Fund. This composition reflects a significant tilt towards the US market, with a broad diversification across sectors. The simplicity of this approach, focusing on just two ETFs, makes it easy to manage while ensuring exposure to a wide range of industries and companies. However, this heavy reliance on stock ETFs also means the portfolio's performance is closely tied to stock market fluctuations, which can introduce volatility.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.88%, with a maximum drawdown of -34.75%. These figures suggest that while the portfolio has experienced significant growth, it has also faced substantial short-term losses. The days contributing to 90% of returns being limited to just 32.0 days highlights the impact of short-term volatility and the importance of staying invested through market cycles to capture gains.

Projection Info

Monte Carlo simulations, which use historical data to project future performance, indicate a wide range of outcomes but a generally positive outlook. With 989 out of 1,000 simulations showing positive returns and a median projected increase of 371%, these projections suggest a strong potential for growth. However, it's crucial to remember that these simulations are based on past data, which cannot guarantee future results.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is almost entirely invested in stocks (99%), with a minimal cash holding (1%). This asset class allocation supports the portfolio's growth-oriented strategy but also exposes it to higher market risk. Diversifying across different asset classes could reduce volatility and provide more stability during market downturns.

Sectors Info

  • Technology
    29%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is heavily weighted towards technology (29%), followed by financial services (16%) and industrials (11%). This concentration in technology aligns with recent trends of tech sector outperformance but also increases susceptibility to sector-specific risks. Diversifying more evenly across sectors could help mitigate these risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographic exposure is predominantly North American (81%), with limited exposure to developed Europe (8%) and emerging markets. This concentration enhances the portfolio's growth potential, given the historical strength of the US market, but also limits geographic diversification. Expanding international exposure could provide additional growth opportunities and risk mitigation.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization exposure is balanced, with a focus on mega (42%) and big (30%) cap stocks. This bias towards larger companies may contribute to stability but could also limit exposure to the higher growth potential of smaller companies. Incorporating more mid, small, or micro-cap stocks could enhance growth prospects and diversification.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 1.40%

The portfolio offers a total dividend yield of 1.40%, with the international stock ETF contributing a higher yield than its US counterpart. While dividends contribute to total returns, the focus on growth means dividend income is a secondary consideration. For investors seeking income, increasing the allocation to higher-yielding assets could be beneficial.

Ongoing product costs Info

  • 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) 0.03%

The portfolio benefits from low costs, with total expense ratios (TER) averaging 0.03%. This efficiency supports long-term growth by minimizing the drag on performance. Keeping costs low is a fundamental principle of successful investing, and this portfolio aligns well with that strategy.

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.

Considering the Efficient Frontier, there may be opportunities to optimize the portfolio's risk-return profile. Adjusting allocations between the current assets could potentially achieve a more efficient balance, enhancing returns for a given level of risk. However, any optimization should also consider the investor's risk tolerance and investment goals.

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