A growth-focused portfolio with strong U.S. exposure and moderate international diversification

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

This portfolio is composed predominantly of equity ETFs, with a significant focus on large-cap value and growth stocks. It includes some international exposure, primarily through developed and emerging markets ETFs. The portfolio's structure is well-aligned with a growth profile, aiming to capture market appreciation. Compared to common benchmarks, this allocation is slightly more concentrated in large-cap U.S. equities, which can enhance growth potential but might increase exposure to domestic market risks. Consider diversifying further into other asset classes to mitigate these risks.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 13.0%, indicating robust growth over time. However, it has experienced a maximum drawdown of -32.54%, highlighting the potential volatility associated with its growth-oriented strategy. Compared to benchmarks, this performance suggests above-average returns, albeit with notable risk. While past performance is not indicative of future results, the historical data provides a solid foundation for understanding the portfolio's risk-return dynamics. Consider strategies to mitigate drawdown, such as incorporating more defensive assets.

Projection Info

The Monte Carlo simulation, using 1,000 scenarios, provides potential future outcomes based on historical data. The median projection suggests a 361.21% increase, with a 67th percentile outcome of 542.88%. These projections underscore the portfolio's growth potential but also highlight variability in returns. It's important to remember that these simulations rely on historical data, which doesn't guarantee future performance. To enhance future outcomes, consider reviewing asset correlations and adjusting allocations to optimize risk and return.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of the total allocation. This stock-centric composition aligns with a growth strategy but may lack the diversification benefits of other asset classes like bonds or real estate. Compared to benchmark norms, which often include a mix of asset classes, this portfolio could benefit from greater diversification. Introducing a small allocation to bonds could reduce volatility and provide more stable returns, especially during market downturns.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    7%
  • Basic Materials
    4%
  • Energy
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a significant emphasis on technology, financial services, and industrials. This concentration aligns with growth trends but may expose the portfolio to sector-specific risks, like regulatory changes or economic cycles. Compared to benchmarks, the portfolio's sector weights are skewed towards growth-oriented sectors, which can lead to higher volatility. Consider balancing sector exposures by adding defensive sectors, such as utilities or consumer staples, to enhance stability and reduce risk.

Regions Info

  • North America
    61%
  • Japan
    13%
  • Asia Emerging
    9%
  • Europe Developed
    8%
  • Asia Developed
    4%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with notable allocations in Japan and emerging Asian markets. This allocation provides moderate international diversification but remains heavily skewed towards the U.S. Compared to global benchmarks, which typically have a more balanced geographic spread, this portfolio may be vulnerable to regional economic shifts. Consider increasing exposure to underrepresented regions like Europe or Latin America to enhance diversification and reduce regional risk.

Redundant positions Info

  • Vanguard Mid-Cap Value Index Fund ETF Shares
    Vanguard Mega Cap Value Index Fund ETF Shares
    High correlation
  • iShares U.S. Tech Breakthrough Multisector ETF
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation

Highly correlated assets, such as the Vanguard Mid-Cap Value and Mega Cap Value ETFs, may limit diversification benefits. These correlations indicate that these assets tend to move together, especially during market downturns, which can increase portfolio risk. To improve diversification, consider replacing one of these ETFs with an asset that has a lower correlation to the rest of the portfolio. This adjustment can help manage risk and enhance overall portfolio stability.

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.

Optimizing this portfolio using the Efficient Frontier could enhance its risk-return profile. The Efficient Frontier represents the best possible risk-return trade-off for a given set of assets. By adjusting allocations between existing assets, the portfolio can potentially achieve a more favorable balance. However, this approach is based solely on current holdings and does not account for diversification into new asset classes. Consider rebalancing periodically to maintain optimal efficiency.

Dividends Info

  • WisdomTree Japan Hedged Equity Fund 0.90%
  • Vanguard Mega Cap Value Index Fund ETF Shares 2.30%
  • iShares U.S. Tech Breakthrough Multisector ETF 0.30%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.80%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 1.50%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.60%

The portfolio's average dividend yield is 1.6%, providing a modest income stream. This yield is primarily driven by the Vanguard Mega Cap Value ETF and the FTSE Emerging Markets ETF. For growth-focused investors, dividends may be less of a priority, but they can offer a cushion during market volatility. Compared to income-focused portfolios, this yield is moderate. If income is a goal, consider increasing allocation to higher-yielding assets without sacrificing growth potential.

Ongoing product costs Info

  • WisdomTree Japan Hedged Equity Fund 0.48%
  • Vanguard Mega Cap Value Index Fund ETF Shares 0.07%
  • iShares U.S. Tech Breakthrough Multisector ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.13%

The total expense ratio (TER) of the portfolio is 0.13%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Compared to industry averages, this TER is competitive, reflecting the benefits of using low-cost ETFs. Maintaining low costs is crucial for maximizing net returns, so continue to monitor expense ratios and consider replacing any higher-cost funds with cheaper alternatives that offer similar exposure.

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