A growth-focused portfolio with strong US bias and broad sector exposure

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists primarily of ETFs, with a heavy emphasis on US equities. The Vanguard Total Stock Market Index Fund ETF represents 65% of the portfolio, offering broad exposure to the US market. The Avantis U.S. Small Cap Value ETF, at 15%, adds a tilt towards smaller companies. International exposure is provided by the Vanguard Total International Stock Index Fund ETF and the Avantis International Small Cap Value ETF, together making up 20%. This composition aligns with a growth-focused strategy, though it may benefit from increased diversification into non-US assets to mitigate regional risk.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.66%. This impressive growth rate is indicative of strong market conditions and effective asset selection. However, the maximum drawdown of -36.62% highlights the risk inherent in a growth-oriented portfolio. While past performance is not indicative of future results, maintaining a balance between growth and risk is crucial. Consider periodically reviewing asset allocations to ensure they align with changing market conditions and personal risk tolerance.

Projection Info

The Monte Carlo simulation, a statistical method that uses historical data to predict future outcomes, indicates a median potential growth of 332.7% over the investment horizon. While 951 out of 1,000 simulations resulted in positive returns, the range of outcomes demonstrates inherent market volatility. These projections emphasize the importance of maintaining a diversified portfolio and being prepared for various market scenarios. Regularly revisiting your investment strategy and adjusting allocations as needed can help manage risk and optimize potential returns.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, constituting 99.5% of the total allocation. This high concentration in equities aligns with a growth-focused strategy but also increases exposure to market volatility. Minimal allocations to bonds and cash may limit downside protection during market downturns. To enhance diversification and potentially reduce risk, consider incorporating a broader mix of asset classes such as bonds or alternative investments. This can provide a buffer against market fluctuations and contribute to more stable long-term returns.

Sectors Info

  • Technology
    23%
  • Financials
    17%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    2%

The sector allocation is well-distributed, with technology, financial services, and industrials being the largest sectors. This balance supports diversification, reducing reliance on any single sector's performance. However, the significant exposure to technology (23.14%) may lead to higher volatility, especially during periods of interest rate changes. Regularly reviewing sector allocations and adjusting them in response to economic trends can help maintain a balanced risk profile. Consider increasing exposure to underrepresented sectors to enhance diversification further.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly North American, with an 81.16% exposure. While this aligns with the US-centric focus, it limits diversification benefits from international markets. Exposure to Europe, Japan, and emerging markets is relatively low, which could miss out on growth opportunities abroad. Balancing geographic exposure by increasing investments in non-US markets can enhance diversification and potentially capture global growth trends. This strategy can also mitigate risks associated with regional economic downturns.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This optimization involves adjusting asset allocations to achieve the desired balance between risk and return. While the current portfolio is growth-focused, exploring different allocation scenarios can help identify opportunities for improvement. Regularly revisiting the portfolio's efficiency and making necessary adjustments can enhance performance and ensure alignment with your investment goals and risk tolerance.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.82%

The portfolio's overall dividend yield is 1.82%, with contributions from all ETFs. Dividends provide a steady income stream, which can be reinvested to enhance compounding returns. While the yield is modest, it aligns with the growth focus, where capital appreciation is prioritized over income. Regularly reviewing dividend yields and ensuring they align with your income needs and investment goals is important. If income generation becomes a priority, consider reallocating towards higher-yielding assets to balance growth with income.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.09%, reflecting the cost-effectiveness of the selected ETFs. Low costs are crucial for enhancing long-term returns, as they minimize the drag on performance. This efficient cost structure supports the portfolio's growth objectives. While the current costs are favorable, it's essential to remain vigilant about any changes in fees. Periodically reviewing the cost structure and exploring opportunities to reduce expenses further can enhance overall portfolio performance.

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