Growth Oriented Portfolio with Broad Diversification and Strong Historical Performance for Moderate Risk Tolerance

Report created on Dec 3, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs with a strong focus on equities, particularly in the U.S. market. The SPDR® Portfolio S&P 500 ETF makes up the largest portion at 65%, followed by the Avantis® U.S. Small Cap Value ETF at 20%, and the Vanguard Total International Stock Index Fund at 15%. This composition reflects a growth-oriented strategy, aiming to capture market gains while maintaining a level of diversification across different market segments. The allocation suggests a focus on long-term growth, which could be beneficial for investors with a higher risk tolerance seeking capital appreciation.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 16.64%. This indicates that a hypothetical initial investment would have grown significantly over time. However, it's important to note the portfolio's maximum drawdown of -36.18%, highlighting the potential for substantial short-term losses. This performance history suggests that while the portfolio has the capability to deliver strong returns, it also carries a level of risk that may not be suitable for those unable to withstand significant fluctuations in value.

Projection Info

Using a Monte Carlo simulation, which models potential future performance by simulating numerous possible outcomes, the portfolio shows a wide range of potential returns. Assuming a hypothetical initial investment, the simulation indicates a 5th percentile return of 49.96% and a 67th percentile return of 745.85%. The median outcome suggests a return of 509.86%. This analysis underscores the portfolio's potential for high returns but also highlights the inherent uncertainty and variability in future performance, emphasizing the importance of aligning investment strategies with personal risk tolerance and goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.69% of its allocation, with minimal exposure to cash and other asset classes. This concentration in equities aligns with a growth-oriented investment approach, seeking higher returns over the long term. While this allocation can offer substantial growth potential, it also increases exposure to market volatility. Investors should consider the implications of such a high equity concentration and assess whether this aligns with their risk tolerance and investment objectives, potentially balancing it with other asset classes to mitigate risk.

Sectors Info

  • Technology
    25%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with significant exposure to Technology (24.87%), Financial Services (17.51%), and Consumer Cyclicals (11.81%). This reflects a strategic focus on sectors that have historically driven market growth. However, the portfolio's concentration in these sectors may increase sensitivity to sector-specific risks. To enhance resilience, investors might consider periodically reviewing sector allocations and ensuring a balanced approach that can withstand sector downturns, while still capitalizing on growth opportunities in leading industries.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio has a strong North American focus, with 85.37% of assets allocated there. This indicates a home-country bias, which could be beneficial given the robust performance of U.S. markets. However, it also limits exposure to international markets, which can offer diversification benefits and growth opportunities. Investors may want to assess whether increasing international exposure aligns with their risk tolerance and investment goals, potentially broadening geographic diversification to capture global market dynamics and reduce reliance on a single region.

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 is already positioned along the efficient frontier, focusing on maximizing returns for a given level of risk. Investors looking to optimize further can consider adjusting the balance between riskier and more conservative assets. To achieve a riskier portfolio, they might increase exposure to high-growth equities, while a more conservative approach could involve incorporating bonds or other lower-risk assets. However, given the current growth orientation, the focus should remain on maintaining diversification and managing costs, ensuring the portfolio aligns with the investor's risk tolerance and financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.53%

The portfolio offers a modest dividend yield of 1.53%, with contributions from the Avantis® U.S. Small Cap Value ETF at 1.5%, SPDR® Portfolio S&P 500 ETF at 1.2%, and Vanguard Total International Stock Index Fund at 3.0%. This yield provides a supplementary income stream, albeit relatively low compared to other income-focused investments. For investors seeking higher income, it may be worth exploring options to increase dividend yield, while ensuring that any changes align with overall investment objectives and do not compromise the portfolio's growth potential.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, reflecting a cost-efficient structure. This low-cost approach ensures that more of the investment returns are retained, which is crucial for long-term growth. The individual costs of the Avantis® U.S. Small Cap Value ETF, SPDR® Portfolio S&P 500 ETF, and Vanguard Total International Stock Index Fund are 0.25%, 0.02%, and 0.08%, respectively. Investors should continue to monitor these costs to ensure they remain competitive, as minimizing expenses is a key factor in maximizing net returns over time.

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