A growth-focused portfolio with a strong tilt towards US stocks and low costs
Report created on Aug 1, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 80.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00%
This portfolio is predominantly invested in stocks, with an 80% allocation in the Vanguard Total Stock Market Index Fund ETF Shares and a 20% allocation in the Vanguard Total International Stock Index Fund ETF Shares. This composition suggests a growth-oriented strategy with a heavy emphasis on the US market. The diversification is broad, covering a wide range of sectors and geographies, though with a notable lean towards North America. The simplicity of having just two ETFs keeps the portfolio straightforward, yet effectively diversified across major sectors and global markets.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 12.62%, with a maximum drawdown of -34.77%. These figures indicate a robust growth trajectory over the assessed period, albeit with significant volatility, as evidenced by the drawdown. The days contributing to 90% of returns being concentrated in just 27.0 days highlight the portfolio's susceptibility to short-term market movements. This performance, while strong, underscores the importance of a long-term perspective to weather volatility.
Projection
Monte Carlo simulations, which use historical data to forecast a range of possible future outcomes, suggest a wide array of potential future performances for this portfolio. With 974 out of 1,000 simulations showing positive returns, the median projected growth is substantial. However, the broad range between the 5th and 67th percentiles (21.3% to 411.9%) illustrates the uncertainty inherent in stock investments, emphasizing the need for risk tolerance in growth-focused investing.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's allocation is nearly entirely in stocks (99%), with a minimal cash holding (1%). This asset class distribution is typical for growth-oriented portfolios, which prioritize capital appreciation over income or stability. The stock-heavy strategy aligns with the portfolio's growth objectives but also increases exposure to market volatility. Investors should be prepared for the ups and downs associated with equity markets.
Sectors
- Technology 27%
- Financials 16%
- Consumer Discretionary 11%
- Industrials 10%
- Health Care 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 3%
- Basic Materials 3%
- Real Estate 3%
- Utilities 3%
Sector allocation is well-diversified, with a significant tilt towards technology (27%), financial services (16%), and consumer cyclicals (11%). This sector composition is reflective of the broader market trends but may also lead to increased volatility, especially in tech-heavy portfolios. The diversification across sectors should mitigate some risk, although the heavy reliance on technology and financial services sectors could amplify the portfolio's sensitivity to economic cycles.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
With 81% of assets allocated to North America, the portfolio is heavily weighted towards the US market. While this concentration has historically offered strong growth opportunities, it may also increase vulnerability to region-specific economic downturns. The international exposure, though limited, provides some geographical diversification, which is crucial for mitigating risks associated with the US market and capturing growth in global markets.
Market capitalization
- Mega-cap 42%
- Large-cap 31%
- Mid-cap 19%
- Small-cap 6%
- Micro-cap 2%
The portfolio's market capitalization breakdown shows a preference for larger companies, with mega and big caps comprising 73% of the allocation. This bias towards larger firms may contribute to stability during market fluctuations, as these companies generally have more resources to weather economic downturns. However, the smaller allocation to mid, small, and micro caps limits potential exposure to high-growth opportunities in smaller companies.
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.
Given the portfolio's current allocation and the Efficient Frontier analysis, there may be opportunities to optimize the risk-return profile by adjusting the asset allocation. The Efficient Frontier represents the set of optimal portfolios that offer the highest expected return for a given level of risk. Adjusting the balance between the domestic and international components, or incorporating different asset classes, could potentially enhance returns or reduce volatility, aligning more closely with the investor's risk tolerance and investment goals.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.90%
- Weighted yield (per year) 1.54%
The portfolio offers a combined dividend yield of 1.54%, with the international fund contributing a higher yield (2.90%) compared to the domestic fund (1.20%). While dividends are not the primary focus of this growth-oriented strategy, they provide a source of passive income and potential reinvestment opportunities, contributing to total return. Investors should consider the role of dividends in achieving their overall investment goals.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.03%
The portfolio benefits from extremely low costs, with total expense ratios of 0.03% for the domestic ETF and 0.05% for the international ETF. These low costs are crucial for long-term growth, as they minimize the drag on performance. Keeping investment costs low is a fundamental principle of successful investing, particularly important in a low-yield environment where every basis point counts towards net returns.
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