A growth-focused US-centric portfolio with strong historical returns but limited diversification

Report created on Mar 6, 2025

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.

Positions

The portfolio is heavily weighted towards equities, with a significant 60% allocation to the Vanguard S&P 500 ETF. This is complemented by a 30% allocation to the Schwab U.S. Large-Cap Growth ETF and a 10% allocation to the Avantis® U.S. Small Cap Value ETF. This composition suggests a strong focus on growth and a preference for U.S. large-cap stocks. While this aligns with a growth strategy, it limits exposure to other asset classes, which could enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has delivered impressive returns with a CAGR of 17.60%. This performance is notably strong, especially compared to broader market averages. However, it's important to recognize the portfolio's vulnerability to market downturns, as evidenced by a maximum drawdown of -34.63%. This highlights the potential for significant losses during market volatility, a common risk for growth-focused portfolios.

Projection Info

The forward projection using Monte Carlo simulations indicates a wide range of potential outcomes. With 1,000 simulations, the portfolio shows an annualized return of 19.69% and a 67th percentile ending value of 1,216.6%. However, it's crucial to remember that these projections are based on historical data and do not guarantee future performance. The 5th percentile projection of 60.0% also underscores the potential for lower-than-expected outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can offer high growth potential but also increased volatility. This lack of diversification across asset classes means the portfolio is more susceptible to market fluctuations. Incorporating other asset classes, like bonds or real estate, could help mitigate risk and provide more stable returns, especially during periods of market turbulence.

Sectors Info

  • Technology
    35%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation shows a heavy concentration in technology, making up 35% of the portfolio. While this sector has been a strong performer, it can also be subject to higher volatility, especially with interest rate changes. Balancing the sector allocation by reducing the technology weight and increasing exposure to other sectors could provide more stability and reduce sector-specific risks.

Regions Info

  • North America
    99%

The portfolio's geographic allocation is almost entirely focused on North America, with 99% exposure. This lack of international diversification could limit potential growth opportunities and increase vulnerability to regional economic downturns. Expanding exposure to international markets, particularly in emerging economies, could enhance diversification and provide access to different growth drivers.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    28%
  • Mid-cap
    15%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio has a significant allocation to mega-cap stocks, at 47%, with smaller allocations to big, medium, small, and micro-cap stocks. While mega-cap stocks offer stability, they may not provide the same growth potential as smaller companies. Increasing exposure to small and micro-cap stocks could enhance growth prospects, although it may also increase 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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks to achieve the best possible risk-return ratio. By adjusting the weights of existing assets, the portfolio can potentially improve its efficiency. However, it's important to note that this optimization is based on the current asset selection and does not necessarily address diversification or other investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.80%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.02%

With a total dividend yield of 1.02%, the portfolio provides some income, though it is relatively low compared to more income-focused strategies. While dividends can offer a stable income stream, the focus on growth suggests that capital appreciation is the primary goal. Investors seeking higher income might consider increasing exposure to dividend-paying stocks or other income-generating assets.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's costs are impressively low, with a total TER of 0.06%. This low expense ratio supports better long-term performance, as lower costs mean more of the returns are retained by the investor. Maintaining a focus on low-cost investments can significantly enhance the compounding effect over time, contributing to overall portfolio growth.

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