Balanced growth portfolio with strong US focus and moderate diversification

Report created on Mar 28, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is predominantly composed of ETFs, with the Vanguard Total Stock Market Index Fund ETF making up 62.5% of the allocation. This provides broad exposure to the U.S. stock market. The Vanguard Total International Stock Index Fund ETF adds international diversification with 15%. The remainder includes individual stocks like Berkshire Hathaway and niche ETFs such as Defiance Quantum, which focus on specific sectors or themes. This composition aligns closely with a balanced growth strategy, offering a mix of broad market exposure and targeted investments. However, the reliance on U.S. equities may limit diversification benefits.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 14.12%, indicating impressive growth over time. For context, this performance outpaces many standard benchmarks, suggesting effective asset allocation. However, it has also experienced a maximum drawdown of -24.68%, highlighting periods of significant volatility. This performance trend suggests a robust growth trajectory but with potential for notable declines. Investors should consider this volatility in the context of their risk tolerance and investment horizon. To mitigate drawdowns, diversification across asset classes and geographies could be enhanced.

Projection Info

The forward projection using Monte Carlo simulation indicates a wide range of potential outcomes. With 1,000 simulations, the portfolio shows a 5th percentile end value of 254.6% and a median (50th percentile) of 1,466.3%. This suggests a high likelihood of positive returns, with all simulations yielding gains. However, the simulation is based on historical data and assumptions, which may not predict future performance accurately. Investors should use these projections as a guide rather than a guarantee. It's important to remain flexible and responsive to changing market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, accounting for 99% of the allocation, with a minimal 1% in cash. This stock-heavy allocation can drive significant growth but also increases exposure to market volatility. Compared to typical benchmarks, this allocation offers limited diversification across asset classes. Investors may consider introducing bonds or alternative investments to balance risk and enhance stability. While the current allocation supports growth, diversifying into other asset classes can provide a buffer during market downturns.

Sectors Info

  • Technology
    27%
  • Financials
    20%
  • Industrials
    13%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation shows a strong emphasis on technology (27%) and financial services (20%), aligning with current growth trends. This concentration can lead to higher volatility, especially during sector-specific downturns. Other sectors like industrials and consumer cyclicals provide some balance, but the portfolio is less exposed to defensive sectors like utilities and real estate. This could impact stability during economic downturns. Investors might consider rebalancing to achieve a more even sector distribution, enhancing resilience against sector-specific risks.

Regions Info

  • North America
    84%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The geographic allocation is heavily skewed towards North America, comprising 84% of the portfolio. While this reflects a strong focus on the U.S. market, it limits exposure to international growth opportunities. Comparatively, developed regions like Europe and Japan have minimal representation. This geographic concentration may expose the portfolio to regional risks. To enhance diversification, investors could consider increasing allocations to emerging markets and other developed regions. This could help mitigate risks associated with U.S. market fluctuations.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    33%
  • Mid-cap
    16%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is well-balanced, with 44% in mega-cap stocks and 33% in large-cap stocks. This provides a stable base, reflecting established companies with strong market positions. The inclusion of medium (16%), small (5%), and micro-cap (2%) stocks adds growth potential but also increases volatility. This distribution aligns with typical benchmarks, offering a mix of stability and growth. Investors should ensure this balance aligns with their risk tolerance and consider adjusting allocations to smaller-cap stocks if seeking higher growth or to larger-cap stocks for stability.

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, potentially achieving a higher expected return of 35.53% with a similar risk level. The Efficient Frontier represents the best possible risk-return ratio, focusing on maximizing returns for a given risk level. This optimization considers the current assets and their allocation but does not account for diversification or other goals. Investors might explore rebalancing to achieve this efficiency, enhancing returns while managing risk. However, it's essential to ensure that the optimized allocation aligns with personal investment objectives and risk tolerance.

Dividends Info

  • Howmet Aerospace Inc 0.20%
  • Northrop Grumman Corporation 1.20%
  • Invesco NASDAQ 100 ETF 0.60%
  • Defiance Quantum 0.50%
  • Raytheon Technologies Corp 1.90%
  • Transdigm Group Incorporated 5.40%
  • Textron Inc 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.19%

The portfolio's dividend yield stands at 1.19%, with contributions from various holdings, including Vanguard ETFs and individual stocks like Raytheon and Transdigm Group. This yield provides a modest income stream, which can be appealing for income-focused investors. However, the emphasis on growth-oriented stocks limits the overall yield. Investors seeking higher income might consider adding dividend-focused ETFs or stocks. Balancing growth and income can enhance total returns and provide a buffer during market downturns.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Defiance Quantum 0.40%
  • 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) 0.05%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.05%. This is due to the inclusion of low-cost Vanguard ETFs, which offer broad market exposure at minimal cost. Keeping costs low is crucial for long-term performance, as high fees can erode returns over time. This alignment with cost-effective investment principles is commendable. Investors should continue to monitor expenses and consider low-cost alternatives when rebalancing or adjusting the portfolio to maintain this advantage.

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