A growth-oriented portfolio with strong U.S. focus and moderate international exposure

Report created on Mar 14, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up 70% of the total allocation. The remaining 30% is split between the Vanguard Total International Stock Index Fund ETF Shares (20%) and the Avantis® U.S. Small Cap Value ETF (10%). Such a composition indicates a strong emphasis on U.S. large-cap equities, with a modest allocation to international and small-cap U.S. stocks. This structure aligns well with a growth strategy, leveraging the stability of large-cap stocks while incorporating the potential growth from small-cap and international markets. To further enhance diversification, consider adding other asset types, such as bonds or real estate.

Growth Info

Historically, this portfolio has demonstrated a robust CAGR of 13.76%, significantly outperforming many traditional benchmarks. However, it has also experienced a maximum drawdown of -35.06%, indicating notable volatility during market downturns. The concentrated returns, with 90% of gains occurring over just 14 days, highlight the importance of staying invested to capture these infrequent but substantial gains. This pattern is typical for growth-focused portfolios, which tend to be more volatile. Investors should be prepared for such fluctuations and consider their risk tolerance when evaluating past performance.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With 951 out of 1,000 simulations resulting in positive returns, the portfolio's annualized return is projected at 13.81%. However, the 5th percentile outcome of just 2.6% highlights the inherent uncertainty in projections. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold true in the future. It's crucial to understand that these projections are not guarantees, but they can guide expectations and planning.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly invested in stocks, accounting for 99% of the total allocation, with a minimal 1% in cash. This heavy equity exposure is consistent with a growth strategy, aiming to maximize returns over the long term. However, this lack of diversification across asset classes could increase vulnerability to market volatility. Introducing other asset classes, such as bonds or real estate, could enhance stability and provide more consistent returns. Diversification across asset classes is a fundamental principle to manage risk effectively and achieve a balanced portfolio.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

With 27% of the portfolio allocated to technology, there is a significant sector concentration, followed by financial services and consumer cyclicals. This sector distribution suggests a tilt towards industries with high growth potential, which can lead to higher volatility, especially during economic shifts or interest rate changes. While such a focus can drive returns in favorable conditions, it also increases exposure to sector-specific risks. Balancing sector allocations can help mitigate these risks and provide a more stable performance across different market environments.

Regions Info

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

The portfolio's geographic exposure is heavily skewed towards North America, which comprises 81% of the allocation. This strong U.S. focus aligns with many investors' preference for the relative stability and growth potential of the U.S. market. However, it also limits exposure to other regions, potentially missing out on growth opportunities in emerging markets. Diversifying geographically can reduce regional risk and tap into global economic growth. Consider adjusting the geographic allocation to include more diverse international markets, which can offer different growth drivers and risk profiles.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    16%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio's market capitalization distribution is skewed towards mega and big-cap stocks, making up 72% of the allocation. This concentration in larger companies provides stability and reliability, typical of well-established firms. However, the smaller allocations to medium, small, and micro-cap stocks (27%) offer potential for higher returns due to their growth potential. Balancing exposure across different market capitalizations can enhance diversification and provide a mix of stability and growth. Consider adjusting the allocation to better capture the growth potential of smaller companies.

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 can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets and allocations. This optimization focuses on achieving the maximum expected return for a given level of risk. While the portfolio already aligns well with growth objectives, exploring slight adjustments in asset weights could enhance efficiency. It's important to note that this optimization does not guarantee diversification or other goals but aims to balance risk and return. Regular reviews can ensure the portfolio remains aligned with evolving market conditions.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.80%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.73%

The portfolio's dividend yield stands at 1.73%, with the Vanguard Total International Stock Index Fund ETF Shares offering the highest yield at 3.20%. While dividends provide a steady income stream, this portfolio's focus is primarily on growth rather than income generation. Investors seeking regular income might consider increasing exposure to high-dividend-paying stocks or funds. However, for growth-oriented investors, reinvesting dividends can enhance compounding returns over time. Balancing growth and income through dividends is crucial for aligning with investment goals.

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) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, with the Vanguard S&P 500 ETF boasting a minimal cost of 0.03%. Low costs are a significant advantage, as they enhance long-term returns by minimizing the drag on performance. Keeping expenses low is crucial for maximizing net returns, especially in a growth-focused portfolio. Continually monitoring and managing costs can provide a competitive edge. Investors should remain vigilant about expense ratios and seek cost-effective investment options to optimize portfolio performance.

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