A growth-focused portfolio with broad diversification and moderate risk exposure

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of ETFs, with a significant emphasis on stocks, making up over 99% of the allocation. This structure is typical for growth-oriented portfolios, which prioritize equity exposure to capture higher potential returns. Compared to common benchmarks, the portfolio's composition aligns with a growth strategy, albeit with limited exposure to bonds or other asset classes. To enhance diversification, consider introducing a small allocation to bonds or alternative assets, which could help mitigate volatility during market downturns.

Growth Info

Historically, the portfolio has demonstrated strong performance, achieving a Compound Annual Growth Rate (CAGR) of 14.03%. This impressive growth is tempered by a maximum drawdown of -38.55%, indicating significant volatility during market declines. Comparing this to benchmark indices, the portfolio's returns are competitive, though the volatility is notable. Investors should remain aware of the potential for substantial losses during market corrections and consider strategies to cushion against such impacts, such as maintaining a cash reserve or exploring hedging options.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a 50th percentile return of 339.72% and a 67th percentile return of 531.01%. Monte Carlo simulations use historical data to model future scenarios, but it's important to remember that these are estimates and not guarantees. Given the broad range of possible outcomes, maintaining a flexible investment strategy that can adapt to changing market conditions is advisable. Regularly reviewing and adjusting the portfolio based on performance and personal goals can help manage risk.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is heavily skewed towards stocks, with minimal representation of other asset classes like bonds or cash. This concentration is typical for a growth-focused strategy but may limit diversification benefits. Compared to balanced portfolios, this allocation could expose the investor to higher volatility. To enhance stability, consider incorporating a modest allocation to bonds or other non-correlated assets, which can provide a buffer during market downturns and contribute to a more balanced risk-return profile.

Sectors Info

  • Financials
    20%
  • Technology
    18%
  • Industrials
    14%
  • Consumer Discretionary
    13%
  • Health Care
    8%
  • Energy
    7%
  • Basic Materials
    6%
  • Consumer Staples
    5%
  • Telecommunications
    5%
  • Real Estate
    2%
  • Utilities
    2%

Sectorally, the portfolio is well-diversified, with significant allocations across financial services, technology, and industrials. This broad exposure aligns with benchmark norms, providing a balanced approach that can capture opportunities across various economic cycles. However, the technology sector's 17.6% weighting suggests sensitivity to tech market fluctuations, which could lead to increased volatility. Monitoring sector trends and adjusting allocations in response to macroeconomic changes can help manage sector-specific risks and optimize returns.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Japan
    7%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, accounting for over 67% of the allocation. This concentration aligns with many global benchmarks but may limit exposure to growth opportunities in emerging markets. While North American markets offer stability, diversifying further into underrepresented regions like Asia or Latin America could enhance growth potential and reduce geographic risk. Regularly reassessing geographic allocations can ensure alignment with global economic trends and personal investment goals.

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 Efficient Frontier analysis suggests potential for optimizing the portfolio's risk-return ratio by adjusting asset allocations. By reallocating within the existing assets, the portfolio could achieve a more optimal balance of risk and return, although this may not necessarily enhance diversification. The focus should be on maximizing returns for a given level of risk, ensuring that the portfolio is aligned with the investor's objectives and risk tolerance. Regularly revisiting this analysis can help maintain an efficient investment strategy.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.18%

The portfolio yields an average dividend of 2.18%, with contributions from each ETF, notably the Avantis® International Small Cap Value ETF at 4.3%. Dividends provide a steady income stream, which can be reinvested to enhance growth or used to supplement cash flow needs. For growth-focused investors, reinvesting dividends is a powerful strategy to compound returns over time. Evaluating the role of dividends in your investment strategy can help balance income generation with growth objectives.

Ongoing product costs Info

  • 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) 0.13%

The portfolio's total expense ratio (TER) stands at a competitive 0.13%, with the majority of funds having low fees. Lower costs are beneficial for long-term performance, as they preserve more of the returns for the investor. Compared to industry averages, this TER is quite favorable, supporting the portfolio's growth objectives by minimizing drag on returns. Continuously monitoring and optimizing for cost-efficiency can further enhance the portfolio's net returns over time.

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