This portfolio loves the S&P 500 more than diversification and bonds combined
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 is perfect for the investor who loves riding the highs and can stomach the lows, akin to a thrill-seeker who enjoys roller coasters without bothering to check if the safety harness is locked. It suggests an investor with a high risk tolerance, a potentially shorter investment horizon, and a strong belief in the continued dominance of large-cap U.S. stocks. It's for someone who nods at the advice to diversify but then goes all-in on what's worked in the past decade.
Positions
-
Vanguard S&P 500 ETF
VOO - US9229083632 83.50% -
Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 15.00% -
Vanguard Total Bond Market Index Fund ETF Shares
BND - US9219378356 1.50%
At first glance, this portfolio seems to have a major crush on the S&P 500, holding a whopping 83.5% of its assets there. It's like betting on your favorite horse every race because it won last season. With only 15% in international stocks and a laughable 1.5% in bonds, it's less "broadly diversified" and more "eggs mostly in one basket." Diversification doesn't just mean owning different things; it means owning different things that don't all move in the same direction at the same time.
Growth
Historically, this portfolio's love affair with the S&P 500 has paid off, boasting a CAGR of 14.35%. But let's not forget that past performance is like rearview mirror driving—it's not always indicative of the road ahead. The -33.57% max drawdown is a stark reminder that this portfolio can take you on a wild ride. It's like enjoying a roller coaster until you realize you're not strapped in.
Projection
Monte Carlo simulations suggest a future with a wide range of outcomes, from a modest 19.5% to a booming 211.8% at the median. These simulations are like weather forecasts for your investments—useful, but pack an umbrella just in case. The variance highlights the portfolio's risk, suggesting that while sunny days are likely, there's still a chance of getting caught in a downpour.
Asset classes
- Stocks 98%
- Bonds 1%
- Cash 1%
- Other 0%
- No data 0%
With 98% in stocks and a token 1.5% in bonds, this portfolio is like a diet consisting almost entirely of steak—it might be enjoyable, but it's not exactly balanced. The minimal bond allocation barely serves as a cushion against stock market volatility. And let's not overlook the 1% in cash, presumably there for emergency gum purchases.
Sectors
- Technology 31%
- Financials 15%
- Consumer Discretionary 10%
- Telecommunications 9%
- Health Care 9%
- Industrials 9%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Basic Materials 2%
- Real Estate 2%
The sector allocation mirrors the S&P 500's tech-heavy bias, with 31% in technology. This is akin to loading up your plate at the buffet with only the most expensive items because they look the most appetizing. While tech has been a strong performer, this concentration raises the feast-or-famine risk. Diversifying across sectors can be more like a well-rounded diet.
Regions
- North America 84%
- Europe Developed 6%
- Asia Emerging 2%
- Japan 2%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 0%
- Europe Emerging 0%
This portfolio's geographic allocation screams "home country bias" with 84% in North America. It's like traveling abroad but only eating at McDonald's. While familiar, it misses out on the growth potential and diversification benefits of international markets. Broadening horizons could reduce risk and potentially enhance returns.
Market capitalization
- Mega-cap 46%
- Large-cap 34%
- Mid-cap 17%
- Small-cap 1%
- Micro-cap 0%
The mega and big-cap focus (80% combined) is like always shopping at big-box retailers and ignoring local boutiques. Yes, these companies are the backbone of the economy, but small and mid-caps often offer higher growth potential. A little more attention to these could spice things up without adding too much risk.
Dividends
- Vanguard Total Bond Market Index Fund ETF Shares 3.80%
- Vanguard S&P 500 ETF 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.70%
- Weighted yield (per year) 1.46%
The dividend yield here is modest, with the portfolio's overall yield at 1.46%. It's like getting a bonus at work that's just enough for a nice dinner out, not a game-changer but appreciated. Given the low bond allocation, dividends provide a small but necessary income stream, reinforcing the need for a more balanced approach.
Ongoing product costs
- Vanguard Total Bond Market Index Fund ETF Shares 0.03%
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.03%
On the bright side, the costs are commendably low, with a Total TER of 0.03%. It's like finding a no-fee ATM; it doesn't make you rich, but it's a pleasant surprise. This is one of the few areas where the portfolio doesn't need a makeover—low costs help keep more of those returns in your pocket.
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's risk vs. return optimization seems to have been skipped over in favor of a "more is more" strategy with the S&P 500. It's like using a sledgehammer for a task that requires a scalpel. A more nuanced approach, balancing risk and return, could achieve similar or better outcomes without the roller-coaster ride.
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