Factor tilted US biased equity portfolio with strong recent results and room for efficiency gains
Report created on May 31, 2024Risk profile
4/7
Diversification profile
3/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 40.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 30.00% -
AV American Century ETF Trust
AVNV - US0250721661 20.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 5.00% -
SM VanEck Semiconductor ETF
SMH - US92189F6768 5.00%
The portfolio is a 100% stock mix spread across five ETFs, with a clear tilt to the US and to smaller, cheaper companies. About 40% sits in a broad US large‑cap index, 30% in US small‑cap value, 20% in a more income‑oriented equity ETF, and the remaining 10% in growth and semiconductors. Structurally, this is an all‑equity portfolio with a “core and satellites” feel: a large diversified core plus a few targeted tilts. That matters because the absence of bonds means larger swings, but the diversified equity core helps keep single‑stock risk in check. Overall, this suits someone comfortable with equity volatility who wants some smart tilts rather than a plain index only approach.
Growth
Over the measured period, $1,000 grew to about $1,577, giving a compound annual growth rate (CAGR) of 18.13%. CAGR is the “average speed” of growth per year, smoothing out the bumps. This beat both the US and global market by roughly 2–3 percentage points a year, which is a meaningful edge over time. The max drawdown, about -20%, was only slightly deeper than the benchmarks’ pullbacks, suggesting you earned extra return without taking dramatically more pain. Still, -20% is emotionally tough for many people. Past performance covers only a few years and a specific environment, so it can’t be assumed going forward, but it does show the structure has worked well so far.
Asset classes
- Stocks 100%
Asset‑class exposure is simple: 100% stocks, 0% bonds or cash. That creates strong long‑term growth potential but also exposes the portfolio fully to equity market ups and downs without a stabilizing buffer. Many blended portfolios mix in bonds, which historically have moved differently and softened drawdowns, especially during equity bear markets. Being all‑equity aligns fine with the “Balanced” risk label only if the investor has a high risk tolerance and a long time horizon. The key takeaway is to be sure that income needs and emotional tolerance for big swings match this high‑equity stance, because the structure will not naturally cushion large market drops.
Sectors
- Technology 24%
- Financials 17%
- Consumer Discretionary 12%
- Industrials 12%
- Energy 9%
- Telecommunications 7%
- Health Care 6%
- Basic Materials 5%
- Consumer Staples 4%
- Utilities 1%
- Real Estate 1%
Sector diversification is reasonably broad, with technology the largest at 24%, followed by financials, consumer discretionary, and industrials. This is actually quite close to modern equity benchmarks, which are also tech‑heavy, so you’re broadly aligned with global norms. The extra tilt comes from the dedicated semiconductor ETF, which amplifies cyclical and rate‑sensitive behavior within tech. In rising‑rate or risk‑off environments, these areas can be more volatile. On the plus side, this sector mix positions the portfolio to benefit from innovation and economic growth themes, while still maintaining exposure to more traditional areas like financials and industrials. Overall, the sector spread is healthy, with only a modest overweight toward tech‑related risk.
Regions
- North America 80%
- Europe Developed 8%
- Japan 3%
- Asia Developed 3%
- Asia Emerging 3%
- Australasia 1%
- Latin America 1%
- Africa/Middle East 1%
Geographically, the portfolio is strongly tilted to North America at 80%, with relatively modest allocations across Europe, Japan, and other regions. This is more US‑centric than a pure global benchmark, where the US typically sits closer to 60%. The benefit is alignment with the world’s deepest, most liquid equity market, which has outperformed many regions recently. The trade‑off is higher sensitivity to US policy, currency, and economic cycles, plus less exposure to potential catch‑up growth in other areas. This kind of home‑bias is common for US investors and not inherently problematic, but anyone seeking smoother diversification across global economies might consider whether this US tilt matches their long‑term comfort level.
Market capitalization
- Mega-cap 29%
- Large-cap 23%
- Small-cap 18%
- Mid-cap 15%
- Micro-cap 14%
Market‑cap exposure is nicely spread: about 29% in mega‑caps, 23% in large‑caps, and the remaining half across mid, small, and micro‑caps. This is more diversified by size than a typical cap‑weighted index, which is usually dominated by mega and large companies. Smaller companies tend to be more volatile and cyclical but can offer higher expected long‑term returns, especially when combined with value characteristics. Having meaningful exposure across the full size spectrum reduces dependence on a handful of giants and taps into broader economic growth. The main implication is a bumpier ride than a pure mega‑cap index, but with potentially better long‑run reward for sitting through those additional swings.
True holdings
-
NV NVIDIA Corporation 4.46%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- VanEck Semiconductor ETF
- Vanguard S&P 500 ETF
-
AA Apple Inc 3.15%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
MS Microsoft Corporation 2.37%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
AM Amazon.com Inc 1.66%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
AV Broadcom Inc 1.62%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- VanEck Semiconductor ETF
- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class A 1.47%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class C 1.17%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
ME Meta Platforms Inc. 1.14%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
TS Tesla Inc 0.96%
Part of fund(s):- LS 1x Tesla Tracker ETP Securities GBP
- Schwab U.S. Large-Cap Growth ETF
- Vanguard S&P 500 ETF
-
BR Berkshire Hathaway Inc 0.63%
Part of fund(s):- Vanguard S&P 500 ETF
- Top 10 total 18.65%
Looking through the top ETF holdings, the portfolio’s largest underlying exposures are familiar US mega‑caps like NVIDIA, Apple, Microsoft, Amazon, Alphabet, and Meta. None of these appears as a direct single‑stock position; instead they show up repeatedly across different ETFs, especially the broad index and growth sleeves. This kind of overlap is normal but creates hidden concentration because the same company is owned in several wrappers. For example, NVIDIA at 4.46% is a sizeable indirect bet. Since only top‑10 ETF positions are captured, the actual overlap is likely higher. The main takeaway: diversification across funds does not automatically mean diversification across underlying companies.
Factors
Factor exposure shows high tilts to value and size, meaning the portfolio leans toward cheaper stocks and smaller companies versus the broad market. Factors are like underlying “traits” that explain how and why investments behave over time. A value tilt often does well when previously unloved stocks recover, while a size tilt may shine in strong economic expansions but lag in safety‑seeking markets. Other factors such as momentum, quality, yield, and low volatility sit near neutral, so they behave more like the broad market. Historically, value and size have offered a return edge over very long periods, but with long stretches of underperformance. The main message: expect returns and volatility to diverge noticeably from plain market‑cap indexes.
Risk contribution
-
Avantis® U.S. Small Cap Value ETF
Weight: 30.00% 35.9% -
Vanguard S&P 500 ETF
Weight: 40.00% 35.4% -
American Century ETF Trust
Weight: 20.00% 14.9% -
VanEck Semiconductor ETF
Weight: 5.00% 8.5% -
Schwab U.S. Large-Cap Growth ETF
Weight: 5.00% 5.3%
Risk contribution shows how much each holding drives overall volatility, which can differ from its percentage weight. Here, the small‑cap value ETF is 30% of the portfolio but contributes about 36% of the risk, while the S&P 500 ETF is 40% of the weight with a similar 35% risk share. The semiconductor ETF is the standout: only 5% of assets but about 8.5% of total risk, reflecting its high volatility. The top three positions drive over 86% of the portfolio’s risk, underscoring how concentrated overall behavior is in those core funds. Adjusting position sizes is a simple way to bring risk contribution more in line with intended emphasis without changing the underlying holdings.
Redundant positions
-
High correlationSchwab U.S. Large-Cap Growth ETFVanguard S&P 500 ETF
Correlation measures how closely assets move together, with 1.0 meaning they move almost in lockstep. The S&P 500 ETF and the US large‑cap growth ETF show a very high correlation around 0.96, so they behave quite similarly day‑to‑day. When two holdings are this closely linked, owning both doesn’t add much diversification; it mostly layers similar exposure. That’s not automatically bad — the growth ETF may emphasize a specific style — but it’s worth recognizing this as a stylistic tweak rather than a truly separate risk bucket. In contrast, the small‑cap value and semiconductor tilts likely bring somewhat different return patterns, which is where most incremental diversification within this all‑equity mix is coming from.
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.
On the risk‑return chart, the current portfolio has a Sharpe ratio of 1.01, below both the optimal portfolio’s 1.35 and the minimum‑variance portfolio’s 1.24. The Sharpe ratio compares return to volatility, like miles per gallon for investing. Being about 4.4 percentage points below the efficient frontier means that, for the same 16% risk, different weights among these same ETFs could target higher expected return, or the same return with less volatility. The encouraging part is that nothing new needs to be added; it’s about fine‑tuning allocations. If the goal is better risk‑adjusted results, nudging weights closer to the modeled optimal or minimum‑variance mix could meaningfully improve efficiency while preserving the portfolio’s overall character.
Dividends
- American Century ETF Trust 3.20%
- Avantis® U.S. Small Cap Value ETF 1.40%
- Schwab U.S. Large-Cap Growth ETF 0.30%
- VanEck Semiconductor ETF 0.30%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.57%
The overall dividend yield of about 1.57% is modest, reflecting a focus on total return rather than income. Yield is the annual cash paid out as a percentage of price, like rent from owning a property. The American Century ETF provides the highest yield around 3.2%, while the growth and semiconductor funds sit closer to 0.3%. For an investor still in the accumulation phase, a lower yield is not a problem; reinvesting modest dividends can still compound wealth effectively. For someone seeking higher regular cash flow, this level may feel light and would usually be supplemented by other income sources or by gradually shifting toward more income‑oriented holdings over time.
Ongoing product costs
- American Century ETF Trust 0.34%
- Avantis® U.S. Small Cap Value ETF 0.25%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- VanEck Semiconductor ETF 0.35%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.17%
Costs are impressively low, with an overall TER (total expense ratio) of about 0.17%. TER is the annual fee charged by the funds as a percentage of assets, quietly deducted in the background. Anything under roughly 0.25% for an equity portfolio is usually considered cost‑efficient, and you’re comfortably in that zone. The ultra‑cheap S&P 500 and Schwab growth ETFs help offset the slightly higher fees on the small‑cap value and semiconductor funds. Keeping costs down is one of the few levers investors fully control, and this structure does that very well, supporting better long‑term performance by letting more of the underlying returns compound in your favor each year.
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