A growth-focused portfolio with strong US equity concentration and moderate risk tolerance

Report created on Jan 10, 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 heavily weighted towards equities, with 70% in the Vanguard Total Stock Market Index Fund ETF, 15% in Avantis U.S. Small Cap Value ETF, and 15% in Vanguard Total International Stock Index Fund ETF. This composition indicates a strong focus on growth through broad exposure to US and international equities. Compared to common benchmarks, this portfolio leans towards higher US market exposure. While this can drive growth, it might miss out on diversification benefits from other asset classes like bonds or real estate. Consider whether this equity-heavy allocation aligns with your long-term goals and risk tolerance.

Growth Info

Historically, the portfolio has exhibited a strong Compound Annual Growth Rate (CAGR) of 15.26%, indicating robust past performance. However, it also experienced a significant maximum drawdown of -36.4%, reflecting potential volatility. The high CAGR suggests effective growth, but the drawdown highlights the importance of risk management. Comparing this to typical benchmarks, the portfolio has outperformed in growth terms but with higher volatility. It's essential to remember that past performance doesn't guarantee future results. Regularly assess whether this level of risk is acceptable for your financial goals.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a wide range of potential returns. The 5th percentile projects a modest 12.31% increase, while the 67th percentile suggests a substantial 631.07% gain. These projections highlight the uncertainty and potential for both gains and losses. Monte Carlo analysis provides a probabilistic view but relies on past data, which may not predict future market conditions. Regularly review these projections to ensure they align with your risk tolerance and financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for 99.53% of the allocation. This heavy stock allocation suggests a focus on capital appreciation, typical for growth-oriented portfolios. While stocks offer higher potential returns, they also come with increased volatility. Compared to a balanced benchmark, this portfolio lacks exposure to bonds or other asset classes that could provide stability during market downturns. Diversifying into different asset classes could help mitigate risk and smooth returns over time.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio is diversified across multiple sectors, with significant allocations in technology (24.49%), financial services (16.87%), and industrials (11.26%). This sectoral spread suggests a balanced approach, yet the heavy tech weighting may lead to higher volatility, especially during interest rate fluctuations. Compared to benchmarks, this sector composition is broadly aligned, offering reasonable diversification. However, reviewing sector trends and potential over-concentration is advisable to maintain balance and capitalize on emerging opportunities.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily concentrated in North America, with 85.58% exposure, followed by smaller allocations in Europe and Asia. This North American focus aligns with the portfolio's growth objective but may limit global diversification benefits. Compared to global benchmarks, this allocation is less geographically diversified. Consider increasing exposure to underrepresented regions to enhance diversification and capture growth opportunities in emerging markets. This could help balance risks associated with regional economic fluctuations.

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 risk-return profile can potentially be optimized using the Efficient Frontier, a concept that identifies the best possible return for a given level of risk. This involves reallocating existing assets to achieve a more efficient risk-return balance. While the current allocation is growth-oriented, optimization could enhance returns or reduce risk without altering the portfolio's core focus. Regularly assess whether adjustments could improve efficiency, keeping in mind that optimization is based on historical data and may not predict future outcomes.

Dividends Info

  • 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 3.40%
  • Weighted yield (per year) 1.66%

The portfolio's overall dividend yield is 1.66%, with contributions from all three ETFs. Dividends provide a steady income stream and can cushion against market volatility. The Vanguard Total International Stock Index Fund ETF offers the highest yield at 3.4%, enhancing the portfolio's income potential. For growth-focused investors, dividends may play a secondary role, but they can still contribute to total returns. Regularly review dividend policies to ensure they align with your income needs and reinvestment strategy.

Ongoing product costs Info

  • 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) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, indicating cost-effective management. Lower costs can significantly boost long-term returns by reducing the drag on performance. Each ETF's expense ratio is competitive, particularly the Vanguard Total Stock Market Index Fund ETF at 0.03%. This aligns well with best practices for cost management in investment portfolios. Maintaining low costs is crucial, so continue to monitor fees and consider alternatives if costs rise or better options become available.

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