A growth-focused portfolio with substantial US exposure and a tilt towards emerging markets
Report created on Feb 2, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 60.00% -
DB Xtrackers MSCI EAFE Hedged Equity ETF
DBEF - US2330512003 20.00% -
FL Franklin FTSE India ETF
FLIN - US35473P7693 20.00%
This portfolio consists of three ETFs: Vanguard Total Stock Market Index Fund ETF at 60%, Xtrackers MSCI EAFE Hedged Equity ETF at 20%, and Franklin FTSE India ETF at 20%. The allocation is heavily weighted towards US equities, with a significant portion in international and emerging markets. Compared to a typical balanced portfolio, this one leans more towards equities, which aligns with its growth classification. A higher allocation to US equities might provide stability and familiarity, but it could also limit exposure to other global opportunities. Consider whether this US-heavy allocation aligns with your long-term goals.
Growth
Historically, the portfolio has delivered a robust compound annual growth rate (CAGR) of 13.55%, indicating strong past performance. However, it also experienced a maximum drawdown of -34.61%, highlighting potential volatility. The portfolio's performance outpaced many benchmarks, but it's crucial to remember that past performance doesn't guarantee future results. The concentration in US equities likely contributed to this strong performance, given the historical bull market in the US. Ensure you're comfortable with the potential for similar drawdowns in the future.
Projection
The Monte Carlo simulation, using historical data, projects a range of potential outcomes for the portfolio. With 1,000 simulations, the median outcome suggests a portfolio growth of 329.1%, while the 5th percentile projects 38.8% growth. This method provides a probabilistic view of future performance but relies on past data, which may not account for future market shifts. While the simulations are optimistic, they serve as a guide rather than a guarantee. Stay informed about economic trends that could impact these projections.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is almost entirely invested in stocks, with 99% in equities and only 1% in cash. This allocation maximizes growth potential but also increases exposure to market volatility. Compared to a more diversified portfolio that might include bonds or other asset classes, this one is positioned for higher risk and reward. If your risk tolerance allows, this allocation can be beneficial, but consider if a small allocation to bonds or other assets might improve risk-adjusted returns.
Sectors
- Technology 24%
- Financials 17%
- Consumer Discretionary 11%
- Industrials 10%
- Health Care 10%
- Telecommunications 7%
- Consumer Staples 6%
- Energy 5%
- Basic Materials 4%
- Utilities 3%
- Real Estate 2%
The portfolio is diversified across 11 sectors, with significant exposure to technology (24%), financial services (17%), and consumer cyclicals (11%). This sectoral mix aligns well with global benchmarks, providing a balanced approach to sector diversification. However, the heavy tech weighting could lead to increased volatility, particularly during periods of interest rate changes. Ensure your sector exposure aligns with your risk tolerance and consider rebalancing if certain sectors become disproportionately large.
Regions
- North America 60%
- Asia Emerging 20%
- Europe Developed 13%
- Japan 5%
- Australasia 2%
- Asia Developed 1%
Geographically, the portfolio is heavily weighted towards North America (60%) with notable exposure to Asia Emerging (20%) and Europe Developed (13%). This allocation provides a solid base in developed markets while also capturing growth potential in emerging markets. Compared to global benchmarks, the portfolio’s geographic diversification is commendable, though the lack of exposure to regions like Latin America and Africa/Middle East could be a limitation. Consider whether your geographic allocation reflects your views on regional growth prospects.
Market capitalization
- Mega-cap 46%
- Large-cap 33%
- Mid-cap 14%
- Small-cap 4%
- Micro-cap 1%
The portfolio is skewed towards large-cap stocks, with 46% in mega caps and 33% in big caps. This focus on larger companies can provide stability and lower volatility compared to small-cap stocks. However, the relatively low allocation to small and micro caps (5%) might limit growth potential. Large caps typically offer more predictable returns, while small caps can provide higher growth but with increased risk. Evaluate whether this market cap distribution aligns with your growth objectives and risk appetite.
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's current allocation could be optimized using the Efficient Frontier, which represents the best possible risk-return ratio. This optimization focuses on reallocating existing assets rather than introducing new ones. Balancing risk and return is key, and while the portfolio is already growth-oriented, slight adjustments could enhance its efficiency. Consider consulting with a financial advisor to explore potential rebalancing strategies that align with your risk tolerance and investment goals.
Dividends
- Xtrackers MSCI EAFE Hedged Equity ETF 0.50%
- Franklin FTSE India ETF 1.00%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Weighted yield (per year) 1.02%
The portfolio's dividend yield stands at 1.02%, with the highest yield from the Vanguard Total Stock Market Index Fund ETF at 1.20%. While dividends provide a steady income stream, the portfolio’s focus on growth means dividends are a secondary consideration. For growth-oriented investors, capital appreciation may be prioritized over income. If income is a priority, consider increasing exposure to higher-yielding assets to balance growth with income generation.
Ongoing product costs
- Xtrackers MSCI EAFE Hedged Equity ETF 0.36%
- Franklin FTSE India ETF 0.19%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Weighted costs total (per year) 0.13%
The portfolio's total expense ratio (TER) is 0.13%, which is impressively low and supports better long-term performance by minimizing costs. The Vanguard ETF has the lowest expense ratio at 0.03%, contributing to cost efficiency. Keeping costs low is crucial for maximizing net returns over time. Regularly review your portfolio to ensure costs remain competitive, and consider replacing high-cost funds with more cost-effective alternatives if necessary.
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