A growth-focused portfolio with significant technology exposure and moderate international diversification

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of four ETFs, with a strong emphasis on U.S. small-cap value and S&P 500 stocks. It dedicates 35% to the Avantis U.S. Small Cap Value ETF and 30% to the Vanguard S&P 500 ETF. This composition leans towards growth, given the sizeable allocation to small-cap and tech stocks. While moderately diversified, the portfolio could be more balanced by incorporating a wider variety of asset classes and geographic regions. Consider adding bonds or alternative investments to enhance stability and diversification.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a CAGR of 18.68%. This growth rate suggests strong returns over time, but it also comes with a high max drawdown of nearly 38%. While past performance is not indicative of future results, this trend underscores the potential for significant gains alongside notable volatility. Investors should be prepared for fluctuations in value, especially during market downturns, and may consider strategies to mitigate risk.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, indicates a wide range of future portfolio values. With a median projection of 709.57% growth, the simulations show a high likelihood of positive returns. However, the reliance on historical data means these projections cannot guarantee future results. Investors should remain cautious and adaptable to changing market conditions, ensuring they are comfortable with the potential for varied outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with nearly 100% allocation, leaving minimal exposure to bonds or cash equivalents. This concentration in equities aligns with a growth-focused strategy but may increase risk during market volatility. Diversifying into other asset classes, such as bonds or real estate, could provide a buffer against stock market fluctuations and contribute to a more balanced risk-return profile.

Sectors Info

  • Technology
    37%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Energy
    7%
  • Basic Materials
    5%
  • Health Care
    4%
  • Consumer Staples
    4%
  • Telecommunications
    3%
  • Real Estate
    1%
  • Utilities
    1%

Technology dominates the sector allocation at over 37%, which can lead to higher volatility, especially during periods of rising interest rates. The portfolio also has significant exposure to financial services and industrials. While these sectors offer growth potential, the concentration in tech could expose the portfolio to sector-specific risks. Balancing sector weights by increasing exposure to less represented areas, such as healthcare or consumer defensive, could enhance resilience.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Japan
    3%
  • Australasia
    1%

With 90% of assets in North America, the portfolio has limited international diversification. This concentration may result in vulnerability to regional economic downturns. Expanding geographic exposure to emerging markets or underrepresented regions could improve diversification and reduce risk. Aligning with global benchmarks can provide a more balanced approach to capturing growth opportunities worldwide.

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 optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the existing assets. Adjusting allocations to align with this model can enhance efficiency, though it may not address diversification or other strategic goals. Investors should consider their risk tolerance and investment objectives when implementing such changes to ensure they meet their personal financial targets.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.50%

The portfolio's dividend yield is modest at 1.5%, with the Avantis International Small Cap Value ETF offering the highest yield at 4.3%. While dividends contribute to returns, the focus on growth suggests a preference for capital appreciation over income. Investors seeking higher income may consider increasing allocations to dividend-focused investments, though this may alter the growth-oriented strategy.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is relatively low at 0.16%, which is beneficial for long-term performance. Low costs mean more of the portfolio's returns are retained, compounding over time. This efficient cost structure aligns well with best practices, allowing investors to maximize their gains. Regularly reviewing fund expenses ensures continued cost-effectiveness and supports overall portfolio health.

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