Growth-Oriented Portfolio with Strong U.S. Focus and Moderate Diversification

Report created on Dec 3, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with the Vanguard S&P 500 ETF making up 85% of the allocation. This creates a strong focus on large-cap U.S. stocks, complemented by a 10% allocation to the Avantis U.S. Small Cap Value ETF, adding some exposure to smaller companies. The remaining 5% is in the Vanguard FTSE Developed Markets ETF, giving a modest international presence. This composition suggests a growth-oriented strategy with a focus on U.S. markets, providing potential for high returns but also increased volatility.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 17.33%. However, it has also experienced significant volatility, as evidenced by a maximum drawdown of -35.13%. This indicates that while the portfolio has potential for strong growth, it is also subject to considerable risk during market downturns. The concentration in U.S. equities likely contributes to this volatility, suggesting a need for careful consideration of risk tolerance.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. Assuming a hypothetical initial investment, the results show a wide range of potential outcomes. The 5th percentile indicates a 36.12% return, while the median is 563.78%, and the 67th percentile is 870.95%. With 975 simulations showing positive returns, the portfolio has a high likelihood of achieving gains. This analysis highlights the potential for substantial growth, but also underscores the inherent risks.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, with 99.86% of assets in equities. This high concentration in a single asset class aligns with a growth-focused strategy but increases exposure to market volatility. A small cash allocation of 0.13% provides minimal liquidity, while other asset classes are negligible. To enhance diversification and potentially reduce risk, consider incorporating other asset classes like bonds or real estate, which can provide stability during market fluctuations.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with significant exposure to technology (29.22%), financial services (14.92%), and consumer cyclicals (10.75%). These sectors drive growth but can be volatile. Healthcare and industrials also have notable allocations, offering some balance. However, sectors like utilities and real estate are underrepresented, which could provide defensive qualities. Consider evaluating sector weights to ensure alignment with investment goals and risk tolerance, potentially adjusting for a more balanced sector exposure.

Regions Info

  • North America
    95%
  • Europe Developed
    3%
  • Japan
    1%

Geographically, the portfolio is heavily skewed towards North America, comprising 94.83% of the assets. This strong U.S. focus reflects confidence in the domestic market but limits exposure to international growth opportunities. Europe Developed and Japan have minimal representation, while other regions are nearly absent. To mitigate geographic risk and capture global growth, consider increasing exposure to international markets, which can provide diversification benefits and reduce reliance on U.S. market performance.

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 optimization chart suggests potential for improvement by adjusting asset allocation along the efficient frontier. To achieve a riskier or more conservative portfolio, consider reallocating assets to balance risk and return according to personal risk tolerance. While the current portfolio is growth-oriented, exploring diversification strategies can enhance stability and potentially improve returns. Focus on optimizing asset class and geographic distribution to better align with financial goals and risk appetite.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.32%

The portfolio offers a moderate dividend yield of 1.32%, primarily driven by the Vanguard FTSE Developed Markets ETF at 3.0% and the Avantis U.S. Small Cap Value ETF at 1.5%. The Vanguard S&P 500 ETF contributes a lower yield of 1.2%. While dividends provide a steady income stream, the focus remains on capital appreciation. If income generation is a priority, consider increasing allocations to higher-yielding investments, balancing growth and income to suit financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.05%

The total expense ratio (TER) of the portfolio is a low 0.05%, indicating cost efficiency. The Vanguard S&P 500 ETF and Vanguard FTSE Developed Markets ETF have particularly low fees of 0.03% and 0.05%, respectively, while the Avantis U.S. Small Cap Value ETF has a higher fee of 0.25%. Keeping costs low is crucial for maximizing returns, and this portfolio achieves that well. Regularly review expense ratios to ensure they remain competitive, as lower costs can significantly impact long-term performance.

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