Broadly Diversified Growth Portfolio with High Risk and Strong Performance Potential

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 a growth-oriented investor willing to accept higher risk for potentially higher returns. Such an investor typically has a long-term investment horizon, allowing time to ride out market volatility. They value diversification across sectors and geographies but are primarily focused on capital appreciation rather than income generation. Risk tolerance is moderate to high, with a preference for equities over fixed-income securities to capitalize on market growth opportunities.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    30.00%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    14.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    10.00%
  • JPMorgan U.S. Quality Factor ETF
    JQUA - US46641Q7613
    5.00%
  • iShares Semiconductor ETF
    SOXX - US4642875235
    5.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    5.00%
  • Industrial Select Sector SPDR® Fund
    XLI - US81369Y7040
    5.00%
  • Franklin FTSE Latin America ETF
    FLLA - US35473P5614
    3.00%
  • Global X Uranium ETF
    URA - US37954Y8710
    3.00%

The portfolio is composed of 11 different ETFs, making it broadly diversified. With a significant 30% allocation in the Vanguard S&P 500 ETF, it shows a strong preference for large-cap U.S. equities. Other notable positions include the Vanguard Growth Index Fund ETF Shares and Avantis U.S. Small Cap Value ETF, suggesting a focus on growth and value strategies. This diversification across different ETFs is beneficial for spreading risk, but it's essential to ensure that these funds don't overlap significantly, which could reduce diversification benefits.

Growth Info

Historically, the portfolio has shown an impressive compound annual growth rate (CAGR) of 17.23%. This high return is reflective of its growth-oriented strategy. However, the maximum drawdown of -35.33% indicates considerable volatility, which is typical for growth-focused portfolios. Understanding these metrics can help manage expectations and prepare for potential market downturns. To maintain strong performance, it’s crucial to periodically review the portfolio and ensure that it aligns with current market conditions and personal risk tolerance.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, we project a wide range of potential outcomes for a hypothetical initial investment. The median outcome suggests a portfolio growth of 650.07%, with an annualized return of 18.86%. This simulation provides a probabilistic insight into future performance, helping to understand potential risks and rewards. While these projections are promising, they are based on historical data and assumptions, so it's important to remain cautious and adaptable to changing market conditions.

Asset classes Info

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

The portfolio is heavily weighted towards stocks, with 99.7% of assets in this class. This indicates a high-risk, high-reward strategy, typical for growth portfolios. Such a focus on equities can lead to higher returns, but also increases exposure to market volatility. It might be worth considering a small allocation to bonds or other asset classes to introduce some stability and reduce overall risk, especially if the investment horizon is shorter or risk tolerance is lower.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Industrials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Energy
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with technology leading at 27.5%, followed by financial services and industrials. This diversification across sectors helps mitigate risks associated with sector-specific downturns. However, the high concentration in technology could lead to increased volatility, given the sector's inherent instability. Balancing the portfolio by slightly increasing exposure to more stable sectors like consumer defensive or utilities could provide a buffer against market fluctuations.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Latin America
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Asia Emerging
    1%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily skewed towards North America, accounting for 81.38% of the allocation. This strong regional focus can lead to missed opportunities in emerging markets or other regions experiencing growth. While the U.S. market has been a consistent performer, diversifying across different geographies could enhance returns and reduce risk. Adding more international exposure might provide a hedge against U.S.-specific economic downturns and currency fluctuations.

Redundant positions Info

  • JPMorgan U.S. Quality Factor ETF
    Vanguard S&P 500 ETF
    High correlation
  • Vanguard Total International Stock Index Fund ETF Shares
    Vanguard FTSE Developed Markets Index Fund ETF Shares
    High correlation

There are notable correlations within the portfolio, particularly between the JPMorgan U.S. Quality Factor ETF and the Vanguard S&P 500 ETF, as well as between the Vanguard Total International Stock Index Fund ETF Shares and the Vanguard FTSE Developed Markets Index Fund ETF Shares. High correlations can diminish the benefits of diversification, as assets tend to move in the same direction. Reducing overlap by selecting funds with distinct strategies or regions can enhance diversification and potentially improve risk-adjusted returns.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Franklin FTSE Latin America ETF 7.50%
  • JPMorgan U.S. Quality Factor ETF 1.10%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • iShares Semiconductor ETF 0.70%
  • Global X Uranium ETF 5.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Industrial Select Sector SPDR® Fund 1.30%
  • Weighted yield (per year) 1.90%

The portfolio's total dividend yield is 1.9%, which is relatively modest for a growth-focused portfolio. This yield is primarily driven by the Schwab U.S. Dividend Equity ETF and the Franklin FTSE Latin America ETF. While dividends provide a steady income stream, they are not the primary focus here. For those seeking higher income, exploring options with higher dividend yields could be beneficial. However, it's essential to balance income needs with growth potential to ensure long-term portfolio success.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Franklin FTSE Latin America ETF 0.19%
  • JPMorgan U.S. Quality Factor ETF 0.12%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares Semiconductor ETF 0.35%
  • Global X Uranium ETF 0.69%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Industrial Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is relatively low, indicating cost-efficient management. Keeping costs low is crucial for maximizing net returns over time. The most expensive fund, the Global X Uranium ETF, has an expense ratio of 0.69%, which is significantly higher than the average. While it's important to keep an eye on costs, the focus should also be on the value and diversification benefits each fund brings. Regularly reviewing and optimizing fund choices can help maintain a cost-effective portfolio.

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, it's important to address the overlapping assets that offer no diversification benefits. By aligning the portfolio along the efficient frontier, one can achieve a riskier or more conservative stance. Moving towards the frontier involves adjusting allocations to maximize returns for a given risk level. Reducing highly correlated positions and balancing sector and geographic exposure can help achieve a more efficient portfolio. Prioritizing these adjustments will lay a stronger foundation for future optimization efforts.

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