Broadly Diversified Growth Portfolio with Moderate Risk and Strong Historic Performance

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

Growth Investors

This portfolio is suitable for growth-oriented investors with a moderate to high risk tolerance. Such investors typically have a long-term investment horizon and are willing to withstand short-term volatility for the potential of higher returns. The focus on equities, including small-cap and international stocks, aligns with goals of capital appreciation. Investors in this category may prioritize growth over income, accepting the inherent risks associated with a predominantly stock-based portfolio. The diversification across sectors and geographies also appeals to those seeking broad market exposure.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    40.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    10.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%

The portfolio consists of five ETFs, primarily focused on stocks, with a small allocation to cash and bonds. The largest holding is the Vanguard Total Stock Market Index Fund ETF, making up 40% of the portfolio, followed by the Avantis U.S. Small Cap Value ETF at 20%. The remaining allocation includes international stocks, with the Vanguard Total International Stock Index Fund ETF and the Avantis International Small Cap Value ETF, and a dividend-focused ETF, Schwab U.S. Dividend Equity ETF. This composition indicates a strong focus on growth through equity investments, with a modest allocation to dividend yield.

Growth

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 12.61%, with a significant maximum drawdown of -37.65%. This suggests that while the portfolio has delivered strong long-term growth, it has also experienced substantial volatility. The fact that 90% of returns are concentrated in just 14 days highlights the importance of staying invested to capture gains during market upswings. Investors should be prepared for periods of volatility and consider strategies to manage risk, such as diversification or rebalancing.

Projection

A Monte Carlo simulation, using 1,000 iterations, projects potential future outcomes for the portfolio with a hypothetical initial investment. The results show a median return of 372.22%, with a 67th percentile return of 616.35%, suggesting optimistic growth prospects. The simulation indicates a strong likelihood of positive returns, with 965 out of 1,000 simulations resulting in gains. While Monte Carlo simulations provide valuable insights, they are based on historical data and assumptions, so investors should continue to monitor their portfolio and adapt to changing market conditions.

Asset classes

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

The portfolio is heavily weighted towards stocks, comprising 99.18% of the total allocation. This reflects a growth-oriented strategy, aiming to capitalize on the long-term appreciation potential of equities. A small allocation to cash, bonds, and other assets provides limited diversification beyond equities. While this asset class allocation aligns with a higher risk tolerance, investors seeking to reduce volatility may consider increasing exposure to bonds or other asset classes to achieve a more balanced risk-return profile.

Sectors

  • Financials
    18%
  • Technology
    17%
  • Industrials
    14%
  • Consumer Discretionary
    13%
  • Health Care
    9%
  • Energy
    8%
  • Consumer Staples
    6%
  • Basic Materials
    6%
  • Telecommunications
    5%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diverse, with significant exposure to financial services, technology, and industrials. These sectors account for nearly half of the portfolio, providing a balanced approach across different economic areas. However, there is limited representation in utilities and real estate, which could offer defensive characteristics during market downturns. Investors may want to consider increasing exposure to underrepresented sectors to enhance diversification and potentially reduce risk during periods of economic uncertainty.

Regions

  • North America
    72%
  • Europe Developed
    13%
  • Japan
    6%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North American assets, accounting for 71.9% of the allocation. While this aligns with a focus on U.S. equities, there is some exposure to developed Europe, Japan, and emerging markets. This provides a degree of international diversification, but the concentration in North America suggests vulnerability to regional economic shifts. To mitigate this risk, investors could consider further diversifying their geographic exposure, potentially increasing allocations to emerging markets or other underrepresented regions.

Redundant positions

  • Avantis® International Small Cap Value ETF
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation

The portfolio exhibits high correlation among its assets, particularly within the equity positions. This means that the assets tend to move in the same direction, which can amplify both gains and losses. High correlation may increase portfolio volatility, especially during market downturns. To reduce this risk, investors may consider incorporating assets with lower correlations, such as bonds or alternative investments, to achieve a more balanced and resilient portfolio.

Dividends

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 2.08%

The portfolio offers an average dividend yield of 2.08%, with the Schwab U.S. Dividend Equity ETF providing the highest yield at 3.5%. This suggests a moderate income stream from dividends, which can be appealing for investors seeking regular cash flow. The inclusion of dividend-focused ETFs helps balance the growth-oriented nature of the portfolio. Investors interested in enhancing their income stream may consider increasing their allocation to dividend-paying assets, while those focused on growth may prioritize capital appreciation over dividends.

Ongoing product costs

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The overall cost of the portfolio is relatively low, with a total expense ratio (TER) of 0.12%. This is a positive aspect, as lower costs can enhance net returns over time. The Vanguard and Schwab ETFs contribute to the low-cost structure, while the Avantis ETFs have slightly higher expense ratios. Maintaining a focus on low-cost investments is crucial for maximizing returns, and investors should continue to monitor the expense ratios of their holdings. Consideration of cost-effective strategies, like index funds or ETFs, can further optimize portfolio performance.

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