A growth-focused portfolio with strong sector diversification and moderate risk exposure
Report created on Mar 6, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 45.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 30.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 15.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 10.00%
The portfolio is primarily composed of equity ETFs, with a 45% allocation to the Vanguard Total Stock Market Index Fund and a 30% allocation to the Vanguard Total International Stock Index Fund. The remaining 25% is split between Avantis U.S. and International Small Cap Value ETFs. This structure is consistent with a growth-focused strategy, offering broad market exposure. Such a composition can provide a balance between growth potential and risk, aligning well with the portfolio's risk classification. To ensure continued alignment with growth goals, consider periodically reviewing asset performance and market conditions.
Growth
The portfolio has demonstrated a strong historic performance with a Compound Annual Growth Rate (CAGR) of 13.22%. This indicates a robust growth trajectory over time, outperforming many market benchmarks. However, it also experienced a significant maximum drawdown of -37.06%, highlighting potential volatility. The historical performance provides a useful reference but should be viewed with caution, as past performance does not guarantee future returns. Regularly reviewing performance against benchmarks can help maintain a clear perspective on risk and reward dynamics.
Projection
Using Monte Carlo simulations, which create a range of potential future outcomes based on historical data, the portfolio's projected annualized return is 13.71%. The simulations suggest a high probability of positive returns, with 959 out of 1,000 simulations showing gains. This projection provides a broad view of potential outcomes, but it's important to remember that these are based on historical trends and assumptions, which may not hold in the future. Regularly updating these projections can help manage expectations and adjust strategies as needed.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is heavily weighted towards stocks at 99%, with only 1% in cash. This allocation reflects a strong growth orientation, as equities typically offer higher returns over the long term compared to bonds or other asset classes. However, the lack of bonds or other fixed-income assets may increase volatility and risk. A diversified mix of asset classes can help mitigate risks and provide stability during market downturns. Consider whether introducing more asset class variety aligns with your risk tolerance and investment goals.
Sectors
- Technology 20%
- Financials 19%
- Industrials 13%
- Consumer Discretionary 12%
- Health Care 8%
- Telecommunications 6%
- Energy 6%
- Basic Materials 6%
- Consumer Staples 5%
- Real Estate 2%
- Utilities 2%
Sector allocation is diverse, with technology (20%) and financial services (19%) leading the way. This broad sector exposure helps reduce risk associated with any single industry. However, a high concentration in technology may introduce volatility, especially during periods of interest rate changes. Maintaining a balanced sector allocation can help manage risk and capture opportunities across different economic cycles. Regularly reassessing sector trends and rebalancing as needed can ensure alignment with market conditions and personal risk preferences.
Regions
- North America 63%
- Europe Developed 16%
- Japan 8%
- Asia Emerging 5%
- Asia Developed 3%
- Australasia 2%
- Africa/Middle East 2%
- Latin America 1%
The portfolio's geographic allocation is predominantly in North America (63%), with notable exposure to Europe Developed (16%) and Japan (8%). This geographic mix provides a strong foundation for diversification, though it leans heavily towards developed markets. Increasing exposure to emerging markets might offer additional growth opportunities and further diversify risk. Geographic diversification can mitigate the impact of regional economic downturns. Periodically reviewing geographic allocations can help capitalize on global market shifts and emerging trends.
Market capitalization
- Mega-cap 31%
- Large-cap 23%
- Mid-cap 19%
- Small-cap 16%
- Micro-cap 8%
The portfolio's market capitalization distribution is well-balanced, with 31% in mega caps and 23% in big caps, complemented by significant exposure to medium (19%), small (16%), and micro caps (8%). This mix offers a blend of stability and growth potential. Larger companies tend to provide stability, while smaller firms might offer higher growth prospects. This diversification across market caps can help manage risk and capture varied growth opportunities. Monitoring market cap trends can help ensure continued alignment with growth 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.
Click on the colored dots to explore allocations.
The portfolio could benefit from Efficient Frontier optimization, which seeks the best possible risk-return ratio by adjusting asset allocations. This approach focuses on maximizing returns for a given level of risk. While the current portfolio is growth-oriented, there may be opportunities to enhance risk-adjusted returns by fine-tuning allocations. Efficient Frontier optimization can help achieve a more balanced risk-return profile. Periodically evaluating the portfolio's efficiency can ensure alignment with evolving market conditions and investment goals.
Dividends
- Avantis® International Small Cap Value ETF 4.00%
- Avantis® U.S. Small Cap Value ETF 1.80%
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Vanguard Total International Stock Index Fund ETF Shares 3.10%
- Weighted yield (per year) 2.18%
The portfolio's dividend yield is 2.18%, with contributions from all ETFs. Dividends can provide a steady income stream and enhance total returns, particularly in volatile markets. This yield is a positive aspect for investors seeking income alongside growth. Dividend-paying stocks can offer some downside protection during market downturns. Balancing growth and income objectives through dividend-paying assets can support long-term financial goals. Periodically reviewing dividend yields can help optimize income generation.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Avantis® U.S. Small Cap Value ETF 0.25%
- 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) 0.11%
The portfolio's total expense ratio (TER) is impressively low at 0.11%, with individual ETF costs ranging from 0.03% to 0.36%. Keeping costs low is crucial for maximizing long-term returns, as fees can significantly erode investment gains over time. This cost efficiency aligns with best practices in portfolio management. Monitoring expense ratios and seeking cost-effective investment options can further enhance returns. Regularly reviewing and optimizing costs can support financial objectives and improve overall portfolio performance.
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