A growth-focused portfolio with substantial US market exposure and diverse global reach

Report created on Jan 13, 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 a 99% allocation to stocks, and minimal holdings in cash, bonds, or other asset classes. This composition is typical for a growth-focused portfolio, aiming to capitalize on long-term market appreciation. The heavy reliance on equities suggests a higher risk profile, which can lead to significant volatility. To enhance stability, consider incorporating a modest allocation to bonds or other fixed-income assets, which can provide a buffer during market downturns.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.64%, outperforming many benchmarks. However, it experienced a maximum drawdown of -36.72%, indicating significant potential losses during market downturns. This performance demonstrates the portfolio's capacity for growth but also highlights its vulnerability to market volatility. To mitigate such risks, consider strategies like diversification or tactical asset allocation, which can help cushion against severe market fluctuations and reduce drawdown impacts.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a 50th percentile return of 265.35% over the investment horizon. While 939 out of 1,000 simulations show positive returns, it's important to note that past performance is not a guarantee of future results. The simulations suggest a potential for substantial growth, but also highlight the possibility of a -7.29% return in the worst-case scenario. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's current allocation is heavily skewed towards equities, with negligible exposure to bonds, cash, or other asset classes. This focus on stocks aligns with a growth strategy but may limit diversification benefits. A more balanced approach could involve increasing exposure to other asset classes, which can help mitigate risk and enhance stability. Diversifying across different asset types can provide a smoother return profile and reduce the impact of market volatility on the portfolio.

Sectors Info

  • Technology
    19%
  • Financials
    19%
  • Industrials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Energy
    6%
  • Telecommunications
    6%
  • Basic Materials
    6%
  • Consumer Staples
    6%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation is relatively balanced, with significant exposure to technology (19.06%) and financial services (18.64%). This alignment provides diversification across various economic segments, which can help manage sector-specific risks. However, the concentration in tech may lead to higher volatility, especially during periods of interest rate changes or tech sector corrections. To further diversify, consider increasing exposure to underrepresented sectors, which can provide additional stability and reduce reliance on a few high-performing areas.

Regions Info

  • North America
    59%
  • Europe Developed
    16%
  • Japan
    8%
  • Asia Emerging
    7%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    2%
  • Latin America
    1%

The portfolio's geographic exposure is primarily focused on North America (59.09%), with notable allocations to Europe Developed and Japan. This distribution aligns with common benchmarks, providing broad international diversification. However, the underweighting in emerging markets could limit growth potential from rapidly developing regions. To enhance diversification and capture growth opportunities, consider increasing exposure to emerging markets, which can offer higher returns due to their faster economic growth rates.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for the current assets. This involves adjusting asset allocations to achieve maximum returns for a given level of risk. While the portfolio is already growth-focused, fine-tuning allocations can enhance efficiency without sacrificing diversification. Regular optimization ensures that the portfolio remains aligned with the investor's risk tolerance and financial goals, adapting to changing market conditions.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.97%

The portfolio's total dividend yield of 1.97% contributes to overall returns, providing a steady income stream. This yield is beneficial for growth-focused investors seeking additional income without sacrificing growth potential. However, the yield is relatively modest compared to high-dividend strategies. For those prioritizing income, consider increasing allocations to higher-yielding assets, which can enhance cash flow while maintaining growth exposure. Balancing income and growth can optimize the portfolio for both capital appreciation and income generation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) of 0.1% is impressively low, supporting better long-term performance by minimizing costs. Lower fees mean more of the portfolio's returns are retained, compounding over time to enhance overall growth. This cost efficiency is a positive aspect, aligning with best practices for maximizing investment returns. Regularly reviewing and comparing fund fees can ensure that the portfolio remains cost-effective, potentially considering even lower-cost alternatives if available.

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