A growth-focused portfolio with strong U.S. exposure and moderate diversification

Report created on Feb 17, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equity ETFs, with a significant portion in large-cap U.S. stocks. The Vanguard Mega Cap Value Index Fund and Schwab U.S. Large-Cap Growth ETF together make up over 58% of the portfolio, indicating a strong preference for large-cap equities. This composition aligns with a growth-focused strategy, but it may lack diversification across asset classes. A typical balanced portfolio might include bonds or other asset classes to mitigate risk. Consider introducing non-equity assets to improve risk management and potentially enhance returns during market downturns.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 15.65%. This is impressive and suggests a strong growth trajectory compared to many benchmarks. However, it also experienced a maximum drawdown of -35.52%, highlighting potential volatility. The portfolio's reliance on a small number of days for the majority of returns suggests that timing plays a significant role. While past performance is encouraging, it's important to remember that it does not guarantee future results. Diversifying further could help mitigate such volatility.

Projection Info

The Monte Carlo simulation provides a range of potential outcomes for the portfolio's future performance. Using 1,000 simulations, it projects a median return of 489% and an annualized return of 16.13%. While this suggests strong potential growth, the 5th percentile outcome of 32.2% underscores the uncertainty and risk involved. Monte Carlo simulations rely on historical data, which may not always predict future market conditions. Therefore, it's wise to view these projections as one of many tools for decision-making rather than definitive forecasts.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no exposure to bonds, cash, or alternative asset classes. While this aligns with a growth-focused strategy, it may increase vulnerability to market volatility. A more diversified allocation that includes bonds or other asset classes could reduce risk and provide more stable returns. This is particularly relevant during periods of market turbulence when equities may underperform. Consider adding fixed-income or alternative investments to balance growth potential with risk management.

Sectors Info

  • Technology
    22%
  • Financials
    16%
  • Industrials
    12%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation shows a significant concentration in technology, which accounts for 22% of the portfolio. This is followed by financial services and industrials. Such concentration can lead to higher volatility, especially if specific sectors face downturns. However, it also positions the portfolio to benefit from growth in these sectors. Aligning sector weights more closely with broader market benchmarks could enhance diversification. Alternatively, maintaining the current allocation may be suitable if the investor is comfortable with the associated risks.

Regions Info

  • North America
    83%
  • Europe Developed
    10%
  • Japan
    5%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio is predominantly focused on North America, with 83% of assets allocated there. This strong U.S. bias may limit exposure to growth opportunities in other regions. While this has been beneficial in recent years, increased geographic diversification could reduce regional risk and tap into emerging markets. Consider introducing more international equities, particularly from underrepresented regions like Asia or Latin America, to enhance diversification and potential growth.

Market capitalization Info

  • Large-cap
    31%
  • Mega-cap
    28%
  • Mid-cap
    25%
  • Small-cap
    11%
  • Micro-cap
    4%

The portfolio is well-diversified across market capitalizations, with a mix of mega, big, medium, small, and micro-cap stocks. This distribution helps balance growth potential and risk, as smaller companies often offer higher growth prospects but with increased volatility. The portfolio's current allocation aligns with a growth strategy, leveraging the potential of smaller-cap stocks while maintaining stability with larger-cap holdings. This balance is commendable, and maintaining it can support continued growth.

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 could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This involves adjusting the allocation to achieve optimal efficiency, balancing risk and expected return. While the current allocation is growth-focused, exploring different combinations of existing assets could enhance returns without significantly increasing risk. This approach focuses on maximizing returns for a given level of risk, a key consideration for any growth-oriented portfolio.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.10%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • WisdomTree International Hedged Quality Dividend Growth Fund 1.40%
  • iShares Morningstar Mid-Cap Growth ETF 0.50%
  • iShares Morningstar Mid-Cap Value ETF 1.60%
  • Vanguard Mega Cap Value Index Fund ETF Shares 2.20%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® S&P 600 Small Cap Growth ETF 0.80%
  • Weighted yield (per year) 1.63%

The portfolio's overall dividend yield is 1.63%, with the highest individual yield from the Avantis International Small Cap Value ETF at 4.10%. While dividends contribute to total returns, the portfolio's primary focus appears to be on growth rather than income. For investors seeking regular income, increasing exposure to higher-yielding investments might be beneficial. However, for those focused on capital appreciation, the current yield is adequate, supporting the growth-oriented strategy.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • WisdomTree International Hedged Quality Dividend Growth Fund 0.58%
  • iShares Morningstar Mid-Cap Growth ETF 0.06%
  • iShares Morningstar Mid-Cap Value ETF 0.06%
  • Vanguard Mega Cap Value Index Fund ETF Shares 0.07%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® S&P 600 Small Cap Growth ETF 0.15%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is impressively low. This cost efficiency supports better long-term performance, as lower fees mean more of your money is working for you. The lowest cost ETF is the Schwab U.S. Large-Cap Growth ETF at 0.04%, demonstrating a commitment to minimizing expenses. Maintaining this low-cost structure is advantageous, and regular reviews can ensure that costs remain competitive, maximizing net returns.

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