A growth-focused portfolio with a strong U.S. equity emphasis and moderate international exposure

Report created on Mar 9, 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 of four ETFs, primarily focused on U.S. equities, with 50% in the Vanguard S&P 500 ETF and 25% in the Invesco QQQ Trust. The remaining allocations are 15% in the Vanguard Total International Stock Index Fund ETF and 10% in the Vanguard S&P Small-Cap 600 Value Index Fund ETF. Compared to a typical benchmark, this portfolio is heavily weighted toward large-cap U.S. equities. This structure suggests a growth-oriented strategy with a preference for established markets. To enhance diversification, consider increasing exposure to other asset classes such as bonds or alternative investments.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 13.54%. This is impressive compared to typical market benchmarks, indicating strong growth potential. However, the portfolio also experienced a maximum drawdown of -32.68%, highlighting its susceptibility to market downturns. While past performance is not predictive of future results, understanding these trends can guide expectations. To mitigate risk, consider strategies such as rebalancing or incorporating more defensive assets to cushion against potential future declines.

Projection Info

The forward projection using Monte Carlo simulation, which runs numerous hypothetical scenarios based on historical data, suggests a median end portfolio value increase of 363.4%. While 977 out of 1,000 simulations showed positive returns, it's important to remember that simulations rely on past data and assumptions. They provide a range of possible outcomes rather than certainties. Given these projections, maintaining a balanced approach and regularly reviewing the portfolio can help adapt to changing market conditions and align with long-term goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily skewed towards stocks, with 99% in equities and a negligible 1% in cash. This allocation indicates a high-risk, high-reward strategy typical of growth-focused portfolios. While this can lead to substantial gains during market upswings, it also increases vulnerability during downturns. Compared to a diversified benchmark, this portfolio lacks exposure to fixed-income securities, which can offer stability. Introducing a modest allocation to bonds or other asset classes could enhance risk-adjusted returns and provide a buffer against volatility.

Sectors Info

  • Technology
    33%
  • Consumer Discretionary
    12%
  • Financials
    12%
  • Telecommunications
    10%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio's sector allocation is concentrated, with a significant 33% in technology, followed by consumer cyclicals and financial services at 12% each. This tech-heavy bias aligns with recent market trends but could lead to increased volatility, especially during interest rate hikes or tech sector corrections. Compared to a broader market index, the portfolio might benefit from more balanced sector exposure. Consider diversifying into underrepresented sectors like healthcare or utilities to reduce sector-specific risks and enhance stability.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with 85% exposure, and limited international diversification. This concentration can lead to overreliance on U.S. market performance. Compared to global benchmarks, which typically have a more balanced geographic spread, this portfolio might benefit from increased exposure to emerging markets or other developed regions. Expanding international allocations could enhance diversification, reduce region-specific risks, and capture growth opportunities outside the U.S.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    31%
  • Mid-cap
    14%
  • Micro-cap
    6%
  • Small-cap
    5%

The portfolio's market capitalization is predominantly in mega and big caps, comprising 74% combined. This focus on large-cap stocks aligns with a strategy favoring stability and established companies. However, with only 5% in small caps, the portfolio may miss out on potential high-growth opportunities that smaller companies can offer. Compared to benchmarks that typically include a broader range of market caps, introducing more small and mid-cap exposure could enhance growth potential and diversification.

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 possible risk-return ratio for a given set of assets. This optimization focuses on adjusting allocations among existing assets to achieve maximum returns for a given level of risk. It's important to note that efficiency doesn't guarantee diversification or alignment with specific investment goals. Periodic rebalancing and reassessment of risk tolerance can help maintain an optimal balance between risk and return as market conditions change.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 1.40%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.40%

The portfolio offers a total dividend yield of 1.40%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.10%. While dividends provide a steady income stream, this yield is relatively modest compared to income-focused portfolios. For growth-oriented investors, dividends can be reinvested to enhance compounding returns. If income generation is a priority, consider increasing allocations to higher-yielding assets or dividend-focused funds to balance growth with income.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports better long-term performance by minimizing costs. Lower costs mean more of your investment returns are retained, contributing to compound growth over time. Compared to many actively managed funds, this portfolio's cost efficiency is a significant advantage. While costs are already optimized, regularly reviewing and comparing expense ratios can ensure continued cost-effectiveness as the portfolio evolves.

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