A growth-focused US-centric portfolio with low diversification and high risk exposure

Report created on Apr 9, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF at 80%, with smaller allocations in the Avantis U.S. Small Cap Value ETF and Schwab U.S. Dividend Equity ETF at 10% each. This composition is skewed towards large-cap U.S. equities, reflecting a focus on growth with limited diversification. Compared to a typical balanced portfolio, this one lacks exposure to other asset classes like bonds or international stocks. To enhance diversification, consider integrating additional asset types or regions, which can help mitigate risk and improve overall stability.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 12.89%. This indicates strong returns, particularly when benchmarked against average market performance. However, the maximum drawdown of -35.02% highlights significant volatility. Such volatility can be concerning during market downturns. While past performance is not a guarantee of future results, maintaining a balanced risk profile through diversification can help manage potential downturns. Consider periodic reviews to ensure alignment with long-term goals.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of potential returns. With 1,000 simulations, the median outcome is a 280.7% portfolio increase, while the 5th percentile indicates a potential -13.7% loss. This highlights the inherent uncertainty in projections. While the majority of simulations show positive returns, it's crucial to remember that these projections are based on past data and assumptions. Regularly updating assumptions and stress-testing the portfolio against different scenarios can provide a more robust understanding of potential future outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to cash or other asset classes. This 100% stock allocation aligns with a high-risk, high-reward strategy but may expose the portfolio to significant volatility. Diversification across asset classes, such as bonds or real estate, can help smooth returns and reduce risk. By incorporating different asset types, you can potentially achieve a more balanced risk-return profile, which is especially beneficial during market downturns.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Health Care
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a high concentration in technology (27%) and financial services (16%), with smaller allocations in other sectors. This concentration may lead to higher volatility, particularly if these sectors experience downturns. Aligning closely with benchmark sector weights can enhance diversification. Consider balancing sector exposure by incorporating sectors with less representation, which can help mitigate risk and capitalize on opportunities across different economic cycles.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is predominantly invested in North America (99%), with minimal exposure to other regions. This geographic concentration may limit diversification and increase vulnerability to U.S. market-specific risks. Adding international exposure, particularly in developed and emerging markets, can enhance diversification and provide opportunities for growth in different economic environments. A more globally diversified portfolio can reduce reliance on any single region's economic performance.

Market capitalization Info

  • Mega-cap
    37%
  • Large-cap
    34%
  • Mid-cap
    17%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio leans towards large-cap stocks, with 71% in mega and big caps. This focus on large, established companies typically offers stability but may limit growth potential. Small and medium-cap stocks can provide higher growth opportunities, albeit with increased risk. Balancing market capitalization exposure can help capture growth potential while maintaining stability. Consider adjusting allocations to include more mid and small-cap stocks for a more diversified approach.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. Current asset allocations may not be fully optimized for efficiency, given the concentration in U.S. equities. By adjusting allocations, you can aim for a more efficient portfolio, balancing risk and return. Remember, efficiency focuses on the current assets and their allocation, not necessarily diversification or other goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Schwab U.S. Dividend Equity ETF 4.30%
  • Vanguard S&P 500 ETF 1.50%
  • Weighted yield (per year) 1.80%

The portfolio has a total dividend yield of 1.80%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 4.30%. Dividend income can provide a steady cash flow, beneficial for reinvestment or income needs. For growth-focused investors, reinvesting dividends can enhance compounding returns over time. Consider maintaining a balance between growth and income-generating assets to meet both immediate and long-term financial objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, supporting better long-term performance. Low costs mean more of your money remains invested, enhancing compounding benefits. Regularly reviewing and optimizing for costs can lead to significant savings over time. Maintaining low-cost investments is a positive strategy, ensuring that fees do not erode returns.

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