High-growth portfolio with a strong focus on US equities and moderate international exposure

Report created on Dec 6, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with the Vanguard Total Stock Market Index Fund ETF Shares making up 82.66% of the total. This indicates a strong focus on the US market. The remaining 17.34% is allocated to the Avantis® International Small Cap Value ETF, providing some international diversification. This composition suggests a growth-oriented strategy, aiming to capitalize on the potential for higher returns from equity investments. While the equity-heavy structure can drive significant growth, it also introduces substantial volatility. A more balanced approach with additional asset classes, like bonds, could reduce risk.

Growth Info

Historically, this portfolio has shown impressive growth, with a compound annual growth rate (CAGR) of 16.02%. This indicates that a hypothetical initial investment would have grown significantly over time. However, the maximum drawdown of -35.83% highlights the potential for substantial losses during market downturns. The days that make up 90% of returns being just 17 indicate that most gains occurred in a short period, suggesting a volatile performance. While past performance can provide insights, it does not guarantee future results, and investors should be prepared for potential fluctuations.

Projection Info

Forward projections using Monte Carlo simulations, which analyze potential outcomes based on historical data, predict an annualized return of 15.21%. The 5th percentile shows a potential return of 59.06%, while the 67th percentile projects 718.95%, indicating a wide range of possible outcomes. This highlights the inherent uncertainty and variability in future returns. While simulations provide valuable insights, they rely on historical data and assumptions, which may not fully capture future market conditions. Investors should consider these projections as one of many tools in their decision-making process.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for 99.62% of the allocation. This heavy concentration in equities suggests a focus on capital appreciation, but it also exposes the portfolio to higher volatility. The minimal allocation to cash and bonds limits the portfolio's ability to cushion against market downturns. Diversifying into other asset classes, such as fixed income or alternative investments, could enhance stability and provide more consistent returns over time. A more balanced asset allocation could help mitigate risk while still allowing for growth potential.

Sectors Info

  • Technology
    26%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Energy
    5%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio exhibits a strong sectoral concentration in technology (26.09%), followed by financial services (14.00%) and consumer cyclicals (11.55%). This concentration may benefit from the growth potential of these sectors but also increases vulnerability to sector-specific risks. Lesser exposure to sectors like utilities and real estate suggests limited defensive positioning. To achieve a more balanced sectoral exposure, consider reallocating some investments into underrepresented sectors. This can help reduce the impact of sector-specific downturns and provide more consistent performance across different market conditions.

Regions Info

  • North America
    84%
  • Europe Developed
    7%
  • Japan
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%

With 84.25% of assets in North America, the portfolio is heavily skewed towards the US market. While this can capitalize on the strength of the US economy, it also increases exposure to regional risks. The remaining geographic allocation includes Europe Developed (7.42%) and Japan (5.45%), providing some international diversification. Expanding exposure to emerging markets and other regions could enhance diversification and potentially capture growth opportunities in different economic environments. A more geographically balanced portfolio can help mitigate risks associated with regional economic downturns.

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 potentially be optimized using the Efficient Frontier, which identifies the best risk-return ratio based on current assets. By adjusting the allocation between existing holdings, investors can aim for a more efficient portfolio that maximizes returns for a given level of risk. This process does not necessarily mean adding new assets but rather reallocating within the current portfolio to achieve a better balance. While optimization can enhance performance, it's important to align any changes with the investor's risk tolerance and long-term goals.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.51%

The portfolio's dividend yield stands at 1.51%, with the Avantis® International Small Cap Value ETF offering a higher yield of 3.0% compared to the Vanguard Total Stock Market Index Fund ETF Shares at 1.2%. Dividends provide a steady income stream, which can be particularly beneficial during periods of market volatility. While the current yield is modest, reinvesting dividends can enhance long-term returns through compounding. For those seeking higher income, consider increasing exposure to dividend-focused investments, which may offer more substantial yields while still contributing to overall growth.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.09%

The total expense ratio (TER) for the portfolio is 0.09%, with the Avantis® International Small Cap Value ETF at 0.36% and the Vanguard Total Stock Market Index Fund ETF Shares at 0.03%. This low-cost structure is advantageous, as it minimizes the drag on returns over time. Reducing costs further can enhance long-term performance, as fees compound over time and can significantly impact net returns. Regularly reviewing and optimizing the cost structure by considering lower-cost alternatives can help improve the portfolio's efficiency and maximize investor returns.

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