A growth oriented US heavy portfolio with broad diversification and low costs

Report created on Aug 26, 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 concentrated in three ETFs with a 70 20 10 split heavily favoring a large cap US benchmark fund plus international and a small cap value sleeve. This structure mirrors a common growth tilt where a dominant core equity ETF is complemented by international diversification and a size/value premium. Notably the US large cap ETF forms most of the risk and return profile so rebalancing cadence matters more than adding many tiny holdings. Recommendation: keep the simple core sleeve if simplicity is a priority but set a clear rebalancing rule and review whether the small cap value allocation aligns with intended return and drawdown tolerance.

Growth Info

Assume a hypothetical $10,000 initial investment to illustrate past trends: a CAGR of 16.03% means that on average the investment grew like steady compound growth year over year — CAGR stands for Compound Annual Growth Rate and is like measuring average speed over a long road trip. The portfolio’s max drawdown of -35.06% shows substantial downturn exposure during stress periods. Compared with a pure US large cap benchmark this blend likely outperformed during strong bull markets but gave similar downside in crashes. Recommendation: interpret past returns cautiously since high historical CAGR does not guarantee future performance and maintain a plan for drawdowns.

Projection Info

Monte Carlo simulation was run with 1,000 paths to project a range of possible future outcomes based on historical return patterns and volatility. Monte Carlo means running many hypothetical market scenarios to show a distribution of possible endpoint values rather than a single forecast. The median (50th) outcome and percentiles show a skew toward positive outcomes but the 5th percentile outcome still indicates potential for significant loss. Recommendation: use these projections to set realistic expectations and plan for the lower percentile scenarios by sizing risk appropriately and keeping a liquidity buffer for bad outcomes.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

Equity exposure dominates at roughly 99% stocks with 1% cash which creates a high-growth orientation but limited ballast from bonds or other low-correlated assets. Broadly diversified equities reduce idiosyncratic stock risk but don't replace the stabilizing role of fixed income, real assets, or alternatives during equity downturns. Compared with common balanced norms that include bonds, this allocation amplifies both upside and downside. Recommendation: consider whether a distinct bond or short-term defensive sleeve is desirable to reduce volatility for goal-specific time horizons or to provide cash for rebalancing after sharp market moves.

Sectors Info

  • Technology
    30%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Industrials
    10%
  • Telecommunications
    9%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector weights show a tech heavy tilt at 30% with meaningful financials and consumer cyclicals positions while defensive sectors like utilities and real estate sit near the lower end. A technology concentration can boost long-term returns but also raise cyclical volatility especially when interest rates rise. Overall sector composition aligns reasonably with large cap benchmarks because the core US ETF drives these weights but the small cap value addition slightly shifts exposure. Recommendation: accept sector concentration if intentional for growth but monitor single-sector swings and consider small tilts toward defensives if income stability or lower drawdowns are priorities.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic exposure is 81% North America with the remainder split across Europe developed and small allocations to emerging and Asian regions. This is a clear home-bias relative to global market cap benchmarks which usually hold a larger non-US share. Home bias can be beneficial if domestic markets outperform but reduces diversification against region-specific shocks. Recommendation: if global diversification is an explicit goal consider modest incremental allocations to non-US developed and emerging markets over time, otherwise maintain the current tilt if it reflects a deliberate view on domestic market strength.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    30%
  • Mid-cap
    16%
  • Small-cap
    6%
  • Micro-cap
    5%

Market capitalization exposure skews toward mega and large cap stocks with 72% combined in mega and big caps while mid small and micro together form under a quarter. Large caps typically provide stability and liquidity while smaller caps can offer higher long-term return potential with greater volatility. The small cap value sleeve adds a targeted size/value premium but at just 10% it is a modest tilt. Recommendation: keep the small cap exposure for potential long-term outperformance but ensure the allocation size matches the investor’s capacity for volatility and potential tax implications from higher turnover.

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.

Efficient Frontier optimization finds the mix of current assets that delivers the best expected return for a given level of risk using historical return and volatility inputs; the Efficient Frontier is a curve showing these optimal tradeoffs. This optimization here is limited to reweighting the existing three ETFs and does not add new asset types. Optimization can improve the risk return ratio but depends heavily on input assumptions and past data which may not repeat. Recommendation: use optimization as a guide to rebalancing and risk targets but avoid treating the optimal mix as a precise prediction; consider scenario testing and stress checks before implementation.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.47%

The portfolio’s blended yield is approximately 1.47% with the international ETF contributing higher yield relative to the US large cap fund. Dividends provide income and can smooth returns via reinvestment but for a growth profile their contribution to total return is modest relative to capital gains. Dividend yield relevance rises for income-focused goals or retirees seeking cash flow. Recommendation: if income generation is a goal consider raising allocations to higher-yielding components or using dividend focused vehicles for a portion of the portfolio while being mindful of potential tradeoffs in growth.

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 0.05%
  • Weighted costs total (per year) 0.06%

Total expense ratio across holdings is low at about 0.06% which is an excellent outcome and supports better long-term compounding because lower costs leave more return for the investor. TER, or Total Expense Ratio, represents the annual fee charged by funds and is like a small annual drag on performance. While one fund carries a higher fee the overall portfolio cost is minimal which is aligned with best practice for passive core holdings. Recommendation: keep monitoring fees especially if new funds are added and weigh any active management benefits against additional cost.

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