A broadly diversified portfolio with a balanced risk profile and a strong focus on equities

Report created on Dec 26, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs, with a heavy emphasis on equities, making up nearly 100% of the allocation. The Vanguard Total Stock Market Index Fund ETF Shares is the largest holding at 29.33%, providing broad U.S. market exposure. Such a composition aligns with a balanced portfolio strategy, aiming for growth while managing risk. However, the lack of significant exposure to bonds or other asset classes could lead to increased volatility. To enhance stability, consider integrating a modest allocation to bonds or alternative investments, which could help cushion against market downturns.

Growth Info

Historically, this portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 9.69%, indicating solid long-term performance. However, it has also experienced a maximum drawdown of -25.58%, which highlights potential vulnerability during market downturns. Comparing this performance to common benchmarks can help gauge its competitiveness. While past performance doesn't guarantee future results, maintaining a diversified approach can help mitigate large losses. Consider reviewing the portfolio's historical performance relative to major indices to ensure alignment with investment objectives.

Projection Info

The Monte Carlo simulation projects potential future outcomes using historical data, providing a range of possible returns. With a median projection of 134.58% and an annualized return of 7.89%, the portfolio shows promise for growth. However, the 5th percentile projection indicates a potential loss of -31.5%, underscoring inherent risks. It's important to remember that these simulations are based on historical data and assumptions, which may not fully predict future performance. Regularly reassessing the portfolio's risk and return expectations can help align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily weighted towards stocks, with minimal allocations to cash and bonds. This concentration on equities can drive growth but also increases exposure to market volatility. Compared to a typical balanced portfolio, which might include a higher percentage of bonds, this allocation leans more towards aggressive growth strategies. While the stock-heavy composition supports potential capital appreciation, introducing more fixed-income securities could provide better risk mitigation. A more diversified asset class mix could help balance growth with stability, especially during periods of market stress.

Sectors Info

  • Technology
    22%
  • Financials
    18%
  • Consumer Discretionary
    13%
  • Industrials
    12%
  • Telecommunications
    7%
  • Health Care
    7%
  • Energy
    6%
  • Basic Materials
    6%
  • Consumer Staples
    5%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a notable concentration in technology (21.69%) and financial services (17.76%), which can drive growth but also introduce sector-specific risks. This composition aligns with trends seen in major indices, reflecting a focus on high-growth areas. However, overexposure to these sectors might lead to increased volatility, especially during economic shifts affecting these industries. Diversifying further into underrepresented sectors like utilities or consumer defensive could enhance stability. Regularly reviewing sector performance and adjusting allocations can help manage sector-specific risks effectively.

Regions Info

  • North America
    67%
  • Europe Developed
    10%
  • Asia Emerging
    8%
  • Japan
    5%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is heavily skewed towards North America (67.35%), with limited exposure to emerging markets. This concentration may limit diversification benefits, as regional economic fluctuations could significantly impact returns. While North American markets provide stability, expanding exposure to other regions like Europe or Asia could enhance growth opportunities and reduce reliance on a single market. Balancing geographic exposure can help mitigate risks associated with regional downturns and capture growth potential in diverse markets.

Redundant positions Info

  • Avantis® International Small Cap Value ETF
    Vanguard FTSE Developed Markets Index Fund ETF Shares
    High correlation

Assets within the portfolio, such as the Avantis International Small Cap Value ETF and the Vanguard FTSE Developed Markets Index Fund ETF Shares, show high correlation. This means they tend to move in tandem, offering limited diversification benefits. In times of market stress, highly correlated assets can amplify losses. To enhance diversification, consider reducing overlap by selecting assets with lower correlations. Diversifying across uncorrelated assets can help improve risk management and provide a more resilient portfolio structure.

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 current asset allocation could be optimized by evaluating the Efficient Frontier, which identifies the best risk-return ratio. By adjusting allocations among existing assets, potential improvements in efficiency can be achieved. However, this optimization focuses solely on risk and return, not diversification or other objectives. It's important to balance efficiency with personal investment goals and risk tolerance. Regular optimization reviews can help ensure the portfolio remains aligned with your evolving financial objectives and market conditions.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® Emerging Markets Value ETF 1.00%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.60%

The portfolio's overall dividend yield is 1.6%, with contributions from various ETFs. Dividends can provide a steady income stream, complementing capital appreciation. However, the yield is relatively modest, reflecting a focus on growth-oriented assets. For investors seeking income, incorporating higher-yielding investments could boost returns. Balancing growth and income needs by adjusting the dividend yield can help meet specific financial objectives. Regularly reviewing yield performance and adjusting allocations can ensure alignment with income goals.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • 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) 0.15%

With a Total Expense Ratio (TER) of 0.15%, the portfolio is cost-efficient, supporting better long-term returns. Low costs mean more of your money stays invested, enhancing compounding effects over time. This aligns well with best practices for cost management in portfolio construction. While the current cost structure is favorable, periodically reviewing and comparing fees across similar products can ensure continued cost-effectiveness. Maintaining low costs is crucial for maximizing net returns, especially in a long-term investment strategy.

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