A growth-focused portfolio with a strong U.S. bias and moderate diversification

Report created on Jan 20, 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 mainly of ETFs, with 60% in the Vanguard S&P 500 ETF, 25% in the Vanguard Total International Stock Index Fund ETF, and 15% in the Avantis U.S. Small Cap Value ETF. The heavy allocation to the S&P 500 ETF indicates a strong focus on U.S. large-cap equities. Compared to a typical growth portfolio, this allocation is relatively concentrated in U.S. stocks, which may limit exposure to international opportunities. To enhance diversification, consider incorporating additional asset classes or regions, particularly those not heavily represented here, such as emerging markets or fixed income.

Growth Info

Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.91%. This impressive growth rate suggests that the portfolio has benefited from a favorable market environment, particularly in the U.S. However, it's important to note that past performance doesn't guarantee future results, and the portfolio's maximum drawdown of -35.67% indicates significant volatility. Comparing this to a benchmark like the S&P 500, which has a similar risk profile, can provide additional context. To mitigate future risks, consider diversifying further or employing risk management strategies.

Projection Info

The portfolio's forward projection, based on Monte Carlo simulations, suggests a wide range of potential outcomes. With 1,000 simulations, the 5th percentile outcome is a 26.4% increase, while the 50th percentile shows a 461% increase, and the 67th percentile suggests a 722% increase. These projections use historical data, which may not fully account for future market conditions. While the portfolio's annualized return across simulations is 15.93%, it's crucial to remember that these are estimates, and actual performance may vary. Regularly reviewing and adjusting the portfolio can help align it with changing market dynamics.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, accounting for 99% of the allocation, with only 1% in cash. This strong equity focus aligns with a growth-oriented strategy but may expose the portfolio to higher volatility. Compared to benchmarks, which often include a mix of asset classes, this portfolio's lack of fixed-income or alternative investments might limit its ability to cushion against market downturns. To enhance stability, consider incorporating a small allocation to bonds or other asset classes that typically behave differently from stocks during market fluctuations.

Sectors Info

  • Technology
    24%
  • Financials
    18%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is diversified across multiple industries, with notable allocations in technology (24%), financial services (18%), and consumer cyclicals (11%). This sector composition is similar to common benchmarks, indicating a balanced approach. However, the tech-heavy allocation may lead to higher volatility, especially during periods of interest rate changes. To manage this risk, consider periodically reviewing sector allocations and adjusting to ensure they align with market trends and your risk tolerance. This proactive approach can help maintain a balanced and resilient portfolio.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted toward North America, with 76% exposure, while Europe and Asia have smaller allocations. This U.S. bias aligns with the portfolio's focus on growth but may limit international diversification. Compared to global benchmarks, which often have more balanced geographic exposure, this portfolio might miss out on growth opportunities in emerging markets. To improve geographic diversification, consider gradually increasing allocations to underrepresented regions, which can help mitigate potential risks associated with a concentrated regional focus.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    29%
  • Mid-cap
    15%
  • Small-cap
    9%
  • Micro-cap
    7%

The portfolio's market capitalization allocation is skewed towards mega (39%) and big (29%) companies, with medium (15%), small (9%), and micro (7%) caps also represented. This distribution provides a balanced exposure across various company sizes, which can enhance diversification. Large-cap stocks tend to be more stable, while small and micro-cap stocks offer growth potential but with higher risk. This blend aligns well with a growth strategy. To optimize, consider periodically reviewing the market cap distribution to ensure it remains aligned with your risk tolerance and 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 portfolio appears to be well-positioned along the Efficient Frontier, suggesting a favorable risk-return balance based on the current asset allocation. This means the portfolio is likely achieving the best possible returns for a given level of risk with the existing assets. However, ongoing monitoring is necessary to maintain this efficiency, especially as market conditions evolve. Consider rebalancing periodically to ensure the portfolio remains aligned with the Efficient Frontier, adjusting allocations as needed to optimize risk and return without significantly altering the overall strategy.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.81%

The portfolio offers a total dividend yield of 1.81%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.40%. Dividends can provide a steady income stream and contribute to overall returns, particularly for long-term investors. While the focus of this portfolio is growth, dividends can offer a cushion during market volatility. To enhance income potential, consider gradually increasing the allocation to dividend-paying stocks or funds, ensuring that this aligns with your overall investment strategy and goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, with the Vanguard S&P 500 ETF having the lowest cost at 0.03%. Low costs are beneficial as they help preserve returns over the long term. Compared to industry averages, this cost structure is highly competitive, supporting better net performance. It is important to regularly review expense ratios to ensure they remain low, as cost savings can significantly impact overall returns. Additionally, consider any potential fees associated with trading or account management that may affect the portfolio's net performance.

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