A conservative portfolio with a balanced mix of stocks and bonds and a focus on tax efficiency

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

Conservative Investors

This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to global equities, making it ideal for individuals looking to build wealth over time. The significant allocation to tax-exempt bonds suggests a preference for tax efficiency, likely appealing to investors in higher tax brackets or those specifically seeking tax-advantaged income.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    24.05%
  • VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND ADMIRAL SHARES
    VWIUX - US9229078780
    20.85%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    17.49%
  • VANGUARD LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES
    VWLUX - US9229078608
    15.53%
  • VANGUARD LIMITED-TERM TAX-EXEMPT FUND ADMIRAL SHARES
    VMLUX - US9229078863
    14.20%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    7.89%

The portfolio is well-diversified across two main asset classes: stocks and bonds, each constituting roughly half of the portfolio. This balance indicates a conservative approach aimed at reducing volatility and providing steady income, particularly through the substantial allocation to tax-exempt bond funds. The presence of both U.S. and international stock ETFs enhances global exposure, though the heavy weighting towards tax-exempt bonds is tailored to minimize tax liabilities, likely reflecting the investor's preference for tax efficiency over higher risk-adjusted returns.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 7.66% and a maximum drawdown of -23.15%, the portfolio demonstrates a solid balance between growth and risk management. The days contributing to 90% of returns highlight the portfolio's sensitivity to market movements. Comparing these figures to benchmarks for conservative portfolios can offer insight into performance relative to risk expectations. The performance suggests a well-structured approach to capital preservation and income generation, key goals for conservative investors.

Projection Info

The Monte Carlo simulation, projecting a wide range of outcomes based on historical data, forecasts a median increase of 168.9% in portfolio value, with a significant majority of simulations predicting positive returns. This analysis underscores the portfolio's potential for steady growth while also illustrating the inherent uncertainty in predicting future market movements. It's important to remember that these projections are hypothetical and do not guarantee future results.

Asset classes Info

  • Bonds
    49%
  • Stocks
    49%
  • Cash
    2%
  • Other
    0%
  • No data
    0%

The even split between bonds and stocks is a classic conservative strategy, aiming to capture growth during market upswings while cushioning against downturns through bonds. The small cash allocation provides liquidity for opportunities or rebalancing. This asset class distribution aligns with the portfolio's conservative risk profile, suggesting a strategic balance between growth potential and risk aversion.

Sectors Info

  • Technology
    13%
  • Financials
    8%
  • Industrials
    6%
  • Consumer Discretionary
    5%
  • Health Care
    4%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation leans towards technology, financial services, and industrials, which are sectors typically associated with growth. However, the diversified exposure across multiple sectors, including defensive ones like healthcare and consumer staples, mitigates sector-specific risks. This sectoral balance is crucial for a conservative portfolio, aiming to reduce volatility while still participating in economic growth.

Regions Info

  • Unknown
    51%
  • North America
    33%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

The geographic allocation, with a significant portion in North America and diversified international exposure, reflects a cautious yet opportunistic approach to global investing. The mix of developed and emerging markets exposure could enhance growth potential while the predominance of U.S. assets aligns with the portfolio's conservative stance, leveraging the relative stability of the U.S. market.

Market capitalization Info

  • Mega-cap
    22%
  • Large-cap
    15%
  • Mid-cap
    9%
  • Small-cap
    2%
  • Micro-cap
    1%

The emphasis on mega and large-cap stocks suggests a preference for stability and quality, as these companies are often more resilient during market downturns. The minimal exposure to small and micro-cap stocks is consistent with the conservative risk profile, focusing on established businesses with predictable earnings and dividends.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation
  • VANGUARD LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES
    VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND ADMIRAL SHARES
    High correlation

The high correlation between certain ETFs and tax-exempt bond funds indicates overlapping exposures that may not contribute to diversification. Reducing redundancy in the portfolio could enhance efficiency by eliminating investments that behave similarly, thus not providing the intended diversification benefit during market fluctuations.

Dividends Info

  • VANGUARD LIMITED-TERM TAX-EXEMPT FUND ADMIRAL SHARES 2.80%
  • Vanguard S&P 500 ETF 1.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND ADMIRAL SHARES 2.90%
  • VANGUARD LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES 3.60%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.40%

The dividend yields, especially from the tax-exempt bond funds, contribute to the portfolio's income stream, aligning with the conservative goal of generating steady income. The overall yield of 2.40% is respectable for a conservative portfolio, providing a nice balance between income generation and growth potential.

Ongoing product costs Info

  • VANGUARD LIMITED-TERM TAX-EXEMPT FUND ADMIRAL SHARES 0.09%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • VANGUARD INTERMEDIATE-TERM TAX-EXEMPT FUND ADMIRAL SHARES 0.09%
  • VANGUARD LONG-TERM TAX-EXEMPT FUND ADMIRAL SHARES 0.09%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) of 0.06% is impressively low, maximizing the investor's returns by minimizing costs. This cost efficiency is particularly beneficial in a conservative portfolio where the goal is to preserve capital and generate income, as even small savings in costs can compound significantly over time.

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.

The portfolio could be optimized by addressing the identified highly correlated assets. Removing or reducing exposure to overlapping investments could improve the portfolio's diversification, potentially enhancing risk-adjusted returns. Focusing on this before considering new investments ensures that each asset in the portfolio serves a distinct purpose, contributing to overall portfolio efficiency.

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