Balanced Portfolio with Strong Diversification and Moderate Risk Offers Growth Potential and Stability

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 suitable for an investor who seeks a balance between growth and risk, with a moderate risk tolerance. They likely have a long-term investment horizon and are comfortable with market fluctuations. Their goals may include capital appreciation and some income generation through dividends. Such an investor values diversification across sectors and geographies, aiming to capture global growth opportunities while maintaining stability. This investor is proactive in managing their portfolio, ensuring it aligns with their financial goals and risk appetite over time.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    10.00%
  • Dimensional International Core Equity Market ETF
    DFAI - US25434V2034
    10.00%
  • Avantis® Emerging Markets Equity ETF
    AVEM - US0250726041
    5.00%
  • Avantis® Emerging Markets Value ETF
    AVES - US0250723725
    5.00%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF
    DFEV - US25434V7405
    5.00%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF
    DISV - US25434V7819
    5.00%

This portfolio is primarily composed of ETFs, with a significant allocation towards the Vanguard S&P 500 ETF at 40%. Other noteworthy positions include the Avantis U.S. Small Cap Value ETF and Avantis International Small Cap Value ETF, among others. The portfolio's diversification is broad, spanning various sectors and geographies. The risk classification is balanced, with a risk score of 4 out of 7, indicating moderate risk. This composition suggests a well-rounded approach, balancing potential growth with stability. To enhance diversification, consider monitoring the weightings of individual assets and adjusting allocations as needed.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 13.72%. The maximum drawdown was -17.41%, which reflects the portfolio's ability to recover from market downturns. The majority of returns were concentrated in just 11 days, highlighting the importance of staying invested during volatile periods. This strong historical performance indicates a well-constructed portfolio. To maintain this performance, ensure that the portfolio remains aligned with long-term investment goals and periodically review asset allocations to adapt to changing market conditions.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method models potential outcomes by simulating random market returns. The median projection suggests a 266.92% increase in portfolio value, with an annualized return of 11.33%. Notably, 974 of the simulations resulted in positive returns, indicating a high likelihood of growth. While these projections offer valuable insights, they are not guarantees. To prepare for varying outcomes, consider maintaining a diversified allocation and rebalancing periodically to ensure alignment with risk tolerance and financial objectives.

Asset classes

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

The portfolio is heavily weighted towards stocks, with 99.83% of assets in equities. This allocation reflects a growth-oriented strategy, capitalizing on the potential for higher returns associated with equities. A small portion is held in cash, bonds, and other asset classes, providing minimal diversification outside of stocks. Given the high equity exposure, consider introducing more fixed-income assets to mitigate risk and provide stability during market volatility. This adjustment can help balance the portfolio and align it with a more conservative risk profile if desired.

Sectors

  • Financials
    20%
  • Technology
    18%
  • Industrials
    14%
  • Consumer Discretionary
    13%
  • Energy
    7%
  • Basic Materials
    7%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with significant exposure to financial services, technology, and industrials. These sectors account for over 50% of the portfolio, indicating a strong focus on areas with growth potential. Lesser allocations to sectors like utilities and real estate suggest a strategic emphasis on cyclical sectors. This approach can benefit from economic upswings but may also be more volatile. To enhance stability, consider increasing exposure to defensive sectors, which can provide resilience during economic downturns and reduce overall portfolio volatility.

Regions

  • North America
    62%
  • Europe Developed
    13%
  • Asia Emerging
    8%
  • Japan
    7%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America, with 62.25% allocation. Other regions, including Europe Developed and Asia Emerging, are represented but with smaller allocations. This geographic diversity can help capture growth opportunities across different markets. However, the concentration in North America may expose the portfolio to regional economic risks. To further diversify, consider increasing allocations to underrepresented regions, which can provide exposure to different economic cycles and reduce dependence on any single market's performance.

Redundant positions

  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF
    Dimensional International Core Equity Market ETF
    Avantis® International Small Cap Value ETF
    High correlation
  • Avantis® Emerging Markets Value ETF
    Avantis® Emerging Markets Equity ETF
    Dimensional ETF Trust - Dimensional Emerging Markets Value ETF
    High correlation

The portfolio contains several highly correlated asset groups, such as the Dimensional International Small Cap Value ETF and Avantis International Small Cap Value ETF. These correlations suggest that these assets tend to move in similar directions, which may limit diversification benefits. Reducing exposure to highly correlated assets can enhance diversification and reduce risk. Consider replacing some of these assets with those that have lower correlations to the rest of the portfolio, thereby improving overall portfolio resilience to market fluctuations.

Dividends

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® Emerging Markets Equity ETF 2.80%
  • Avantis® Emerging Markets Value ETF 3.70%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Dimensional International Core Equity Market ETF 2.50%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 2.80%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 2.80%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.94%

The portfolio's total dividend yield is 1.94%, with contributions from various ETFs such as the Avantis International Small Cap Value ETF with a 3.1% yield. This yield provides a modest income stream, complementing the portfolio's growth focus. While the yield is not particularly high, it adds a layer of income stability. To enhance the income component, consider reallocating to higher-yielding assets or increasing exposure to dividend-focused investments. This strategy can help balance growth and income, providing a more comprehensive return profile.

Ongoing product costs

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Equity ETF 0.33%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Dimensional International Core Equity Market ETF 0.18%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 0.43%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 0.42%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, with individual ETF costs varying. The Vanguard S&P 500 ETF has the lowest TER at 0.03%, while others like the Dimensional Emerging Markets Value ETF have higher costs. Overall, the portfolio maintains low costs, which is beneficial for long-term growth as it minimizes the drag on returns. Keeping costs low is crucial for maximizing net returns. Regularly review and compare fund expenses to ensure cost-effectiveness, and consider replacing higher-cost funds with more affordable alternatives if they align with investment objectives.

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.

Before optimizing this portfolio, focus on reducing overlap by addressing highly correlated assets that don't add diversification. By doing so, the portfolio can be better positioned along the efficient frontier, achieving an optimal balance of risk and return. To pursue a riskier portfolio, increase exposure to growth-oriented equities. Conversely, for a more conservative approach, consider adding fixed-income assets. This strategic adjustment can help tailor the portfolio to specific financial goals and risk preferences, enhancing overall performance and resilience.

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