Growth-Oriented Broadly Diversified Portfolio with High Risk and Strong North American Focus

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 suits an investor with a growth-oriented mindset, seeking long-term capital appreciation. Such investors are likely comfortable with higher volatility and have a longer investment horizon, allowing them to ride out market fluctuations. They prioritize potential high returns over short-term stability and are willing to take on more risk. This type of investor values diversification within equities but may not be as concerned with income generation. Their primary goal is to build wealth over time, leveraging the power of compounding and market growth.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    73.22%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    13.89%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    12.89%

The portfolio is dominated by the Vanguard S&P 500 ETF, which constitutes over 73% of the holdings. This heavy weighting in a single ETF suggests a strong focus on large-cap U.S. equities, complemented by international exposure through the Vanguard Total International Stock Index Fund ETF Shares and a tilt towards U.S. small-cap value stocks via the Avantis U.S. Small Cap Value ETF. This composition provides a mix of stability and growth potential. However, the concentration in large-cap U.S. equities could be a point of vulnerability if the U.S. market underperforms. A more balanced allocation could mitigate this risk.

Growth Info

Historically, the portfolio has delivered a commendable compound annual growth rate (CAGR) of 16.37%, reflecting its growth-oriented nature. The max drawdown of -35.41% indicates significant volatility, which is typical for a portfolio with a high equity concentration. The fact that 90% of returns are captured in just 16 days underscores the importance of staying invested to capture these high-return periods. This performance suggests that while the portfolio has the potential for high returns, it also requires a strong stomach for volatility, and staying the course during downturns is crucial.

Projection Info

The forward-looking Monte Carlo simulation, using 1,000 iterations, projects a wide range of potential outcomes for the portfolio. With an annualized return of 16.62%, the simulations show a 5th percentile outcome of 22.96% and a 67th percentile outcome of 725.72%. This demonstrates the inherent uncertainty and variability of future returns. Monte Carlo simulations provide a probabilistic view of future performance, highlighting the importance of being prepared for a range of outcomes. Given this variability, it might be wise to consider strategies to manage risk and ensure alignment with long-term financial goals.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is overwhelmingly composed of stocks, accounting for over 99% of the holdings, with negligible allocations to cash and other asset classes. This heavy equity weighting aligns with a growth-oriented strategy but also increases exposure to market volatility. While equities offer the potential for higher returns, they also come with higher risk. Incorporating other asset classes, such as bonds, could provide diversification benefits and reduce overall portfolio volatility. This could be particularly beneficial for investors seeking to balance growth with risk management.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation within the portfolio is diverse, with a significant tilt towards technology, financial services, and consumer cyclicals. These sectors are known for their growth potential but can also be prone to higher volatility. The presence of defensive sectors like healthcare and consumer defensive provides some balance. However, the portfolio could benefit from a more even distribution across sectors to mitigate sector-specific risks. This diversified sector exposure is essential for capturing growth opportunities while managing the risk of downturns in any single sector.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily skewed towards North America, with over 86% of assets allocated there. This regional concentration exposes the portfolio to risks specific to the North American market, such as economic downturns or policy changes. While there is some international exposure, particularly in Europe and Asia, a more balanced geographic allocation could enhance diversification and reduce reliance on a single region. Expanding exposure to emerging markets and other developed regions could provide additional growth opportunities and risk mitigation.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.49%

The portfolio's dividend yield stands at 1.49%, with contributions from all three ETFs. The Vanguard Total International Stock Index Fund ETF Shares provides the highest yield at 3.0%, offering income potential alongside growth. While the yield is relatively modest, it complements the growth focus of the portfolio. For investors seeking income, it may be worthwhile to explore additional dividend-focused investments. Balancing growth and income can provide a more stable return profile, especially in volatile markets, and help meet cash flow needs.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is a low 0.07%, which is excellent for cost-conscious investors. Low fees can significantly enhance long-term returns by minimizing the drag on performance. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, is particularly cost-effective. Keeping investment costs low is a fundamental principle of successful investing, allowing more of the portfolio's returns to compound over time. Continuously monitoring and managing costs is crucial to maintaining a cost-efficient portfolio, especially as investment strategies evolve.

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 optimization chart suggests that while the current allocation is on the aggressive side, there is potential to adjust along the efficient frontier. For those seeking higher returns, increasing exposure to growth-focused equities could be an option. Conversely, for a more conservative approach, introducing bonds or other lower-risk assets could help reduce volatility. The key is to align the portfolio with the investor's risk tolerance and financial goals. Exploring these adjustments can help optimize the risk-return balance and achieve a more tailored investment strategy.

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