Balanced Growth Portfolio with Strong Historic Performance and Efficient Frontier Alignment

Report created on Aug 7, 2024

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 three ETFs, with a significant weighting towards the Vanguard Total Stock Market Index Fund ETF Shares at 60%, followed by the Vanguard Total International Stock Index Fund ETF Shares at 30%, and the Avantis U.S. Small Cap Value ETF at 10%. This composition indicates a focus on broad market exposure across both domestic and international equities, aiming for diversification and growth. The allocation suggests a strategy that seeks to capture the overall market growth while maintaining a moderate level of diversification, providing a solid foundation for long-term capital appreciation.

Growth Info

With a historical CAGR of 14.53%, the portfolio has shown impressive performance over time. However, the max drawdown of -35.7% highlights potential volatility. This performance suggests a growth-oriented strategy, which can lead to substantial returns but also comes with inherent risks. The concentrated days making up 90% of returns indicate that the portfolio's performance is driven by key market movements. To mitigate risk, consider maintaining a diversified approach while being prepared for market fluctuations, ensuring alignment with long-term investment goals.

Projection Info

Using a Monte-Carlo simulation, which runs numerous scenarios to project future returns, the portfolio shows promising potential. With a hypothetical initial investment, the simulations indicate a median growth of 494.78% and a 5th percentile growth of 26.7%, showcasing a wide range of outcomes. This suggests a strong potential for growth but also underscores market uncertainties. The high count of positive simulations (967 out of 1,000) reflects a favorable outlook. To optimize future growth, consider periodic reviews to ensure alignment with evolving market conditions and personal risk tolerance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, accounting for over 99% of the total allocation, with minimal cash and other assets. This concentration in equities aligns with a growth-focused strategy, aiming for capital appreciation over time. While this approach can yield high returns, it also introduces higher volatility and risk. To enhance stability, consider incorporating a small allocation to bonds or other fixed-income assets, which can provide a buffer against market downturns and reduce overall portfolio risk, aligning with a balanced growth strategy.

Sectors Info

  • Technology
    23%
  • Financials
    17%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation spans 11 different industries, with the largest exposures in Technology, Financial Services, and Industrials. This diverse sector mix suggests an attempt to capture growth across various economic segments. While this diversification can mitigate sector-specific risks, the heavy concentration in Technology may introduce volatility. To manage this, ensure regular reviews of sector performance and consider rebalancing to maintain a well-rounded exposure. This approach can help in capturing growth opportunities while minimizing the impact of downturns in any single sector.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is predominantly focused on North America, making up over 71% of the portfolio, followed by smaller allocations in Europe and Asia. This concentration in North America reflects confidence in the region's economic growth but may expose the portfolio to regional risks. To enhance diversification and capture global growth opportunities, consider gradually increasing exposure to emerging markets and other developed regions. This can provide a more balanced geographic allocation, reducing reliance on any single region and potentially enhancing long-term returns.

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 is currently close to the efficient frontier, indicating a well-optimized balance between risk and return. However, it is not the most optimal, as a portfolio with an expected return of 17.30% and a risk level of 21.80% exists. The efficient frontier represents the set of portfolios offering the highest expected return for a given level of risk. To enhance optimization, consider adjusting the risk level in line with personal preferences. This could involve rebalancing the portfolio to achieve a more optimal risk-return profile, aligning with individual financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.83%

The overall dividend yield of the portfolio stands at 1.83%, with contributions from each ETF. The Vanguard Total International Stock Index Fund ETF Shares offers the highest yield at 3.0%, providing a steady income stream. While dividends contribute to total returns, the portfolio's focus remains on growth. To enhance income, consider reinvesting dividends or exploring higher-yielding assets, balancing growth and income objectives. This approach can support long-term wealth accumulation while providing a cushion during market volatility.

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 0.07%, reflecting a cost-effective investment strategy. The low costs associated with the Vanguard ETFs contribute to maximizing returns by minimizing fees. While the Avantis U.S. Small Cap Value ETF has a higher expense ratio of 0.25%, it remains within a reasonable range. To maintain cost efficiency, periodically review the expense ratios and explore opportunities for cost reduction, ensuring that fees do not erode returns. This focus on low costs supports a sustainable and effective investment approach.

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