A globally diversified growth portfolio tilted to small value stocks with extended duration bonds

Report created on Nov 7, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is built around 89% in stocks, 10% in long‑duration bonds, and 1% in cash, with big anchors in a broad US large‑cap fund and US small value. This leans clearly toward growth, matching the given risk classification of 5/7. Compared with a typical global stock‑bond benchmark (often closer to 60–80% stocks), this is more aggressive but still includes a stabilizing bond sleeve. That combination matters because stock‑heavy mixes usually grow faster but swing more. Keeping the overall stock share intentional and aligned with real‑life needs and behavior can help avoid panic selling and make it easier to stay invested through rough markets.

Growth Info

Historically, a 12.65% compound annual growth rate (CAGR) is very strong; if someone had put in $10,000, it would have grown to roughly $33,000 over 10 years at that pace. The max drawdown of about ‑33% shows that the ride can be rough during bear markets, which is expected for a growth‑tilted mix. The fact that just 19 days explain 90% of returns highlights how missing a few big up days can seriously hurt results. This history is impressive, but it’s still just one path; markets change, and past returns never guarantee anything about the future.

Projection Info

The Monte Carlo simulation uses many “what‑if” paths, built by reshuffling and stressing historical data, to see a range of possible futures rather than just one forecast. Here, 1,000 simulations showed a median (50th percentile) cumulative gain around 212% and an average annualized outcome near 10.76%, with 937 paths ending positive. The 5th percentile at about ‑7.4% reminds us that even well‑built portfolios can disappoint over a given period. These simulations are handy for framing expectations and planning, but they rely on past patterns and assumed relationships, so they can’t capture totally new crises or regime shifts.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

With 89% in stocks and 10% in bonds, the asset‑class mix is clearly growth‑oriented but not all‑in on equities. Stocks drive long‑term growth, while even a small bond slice can help moderate the depth of downturns and sometimes provide gains when stocks stumble. This split is more aggressive than many blended benchmarks, which might hold 20–40% bonds, but still adds some resilience. Keeping cash near 1% avoids too much “money on the sidelines,” which is helpful for compounding. Periodically checking that this stock‑bond balance still fits age, income stability, and spending plans can keep the risk level appropriate over time.

Sectors Info

  • Financials
    17%
  • Technology
    16%
  • Consumer Discretionary
    13%
  • Industrials
    12%
  • Energy
    7%
  • Basic Materials
    6%
  • Health Care
    5%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector exposure is very broad: financials, technology, consumer cyclicals, and industrials together form a large core, with meaningful slices in energy, materials, healthcare, communication services, and defensives. This looks well spread compared with standard global equity benchmarks, which is a strong sign of diversification. One nuance: heavier value and small‑cap tilts often mean larger weights in financials, industrials, and cyclicals, which tend to be more sensitive to economic cycles and interest rates. That can boost returns in recoveries but feel bumpier in recessions. Keeping sector tilts intentional and avoiding big overweights to any single economic theme helps maintain a robust, all‑weather structure.

Regions Info

  • North America
    52%
  • Asia Emerging
    9%
  • Europe Developed
    9%
  • Asia Developed
    7%
  • Japan
    5%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Australasia
    2%
  • Europe Emerging
    1%

Geographically, the portfolio puts about 52% in North America with the rest spread across developed Europe and Asia plus emerging regions like Asia, Latin America, and Africa/Middle East. That’s more globally diversified than a typical US‑only approach and is fairly close to world‑market weightings, which is a big positive. Having meaningful exposure outside one country helps if any single market goes through a long slump. At the same time, non‑US markets can be more volatile and impacted by currency swings. Regularly sanity‑checking the home‑versus‑international balance against personal comfort and income needs can help keep global diversification working without causing stress.

Market capitalization Info

  • Mega-cap
    21%
  • Mid-cap
    20%
  • Small-cap
    19%
  • Large-cap
    15%
  • Micro-cap
    14%

This mix spans the full size spectrum: roughly 21% mega‑cap, 15% large (“big”), 20% mid, 19% small, and 14% micro. That’s a much stronger tilt to smaller companies than standard benchmarks, which are usually dominated by mega and large caps. Smaller and value‑oriented companies historically have offered higher long‑term returns but with more ups and downs and longer dry spells. This broad spread is excellent for diversification across company sizes, but the stronger small‑cap presence means more sensitivity to economic cycles and liquidity scares. Keeping that tilt size‑appropriate relative to risk tolerance helps ensure the added volatility is acceptable when markets get rough.

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.

On a risk–return chart, this portfolio would likely sit near the higher‑return, higher‑volatility part of the Efficient Frontier for its ingredients. The Efficient Frontier is the set of allocations that give the best possible tradeoff between risk (ups and downs) and expected return using the current building blocks. Here, small tweaks—like slightly adjusting the split between large and small stocks or shaving or adding a bit to the bond sleeve—could nudge the mix closer to that “most efficient” point. It’s important to remember that efficiency is about risk versus return only; it doesn’t capture personal goals, taxes, or desire for simplicity.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 3.00%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 4.90%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.70%
  • Vanguard S&P 500 ETF 1.10%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.34%

The overall yield around 2.34% is quite healthy for a growth‑oriented mix, thanks to value‑tilted and dividend‑focused holdings plus the Treasury ETF. Dividends are cash payments from investments and can either be reinvested to boost compounding or used to support spending. Higher yields can soften downturns a bit and provide psychological comfort, but they shouldn’t be chased blindly at the cost of quality or diversification. Here, the dividend profile looks well‑balanced: not overly dependent on any one fund and consistent with a tilt toward smaller and value‑oriented stocks. Keeping an eye on whether payouts are stable rather than overly cyclical can help manage income expectations.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 0.58%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 0.06%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.18%

With a total expense ratio around 0.18%, the costs are impressively low, especially given the use of more specialized small‑cap and value strategies. Expense ratios are the annual fees charged by funds; lower costs mean more of the portfolio’s return stays in your pocket, which adds up significantly over decades. This cost profile is competitive with many index‑heavy portfolios and well below typical actively managed mixes. That’s a real strength and directly supports better long‑term compounding. Periodically checking for cheaper but similarly structured alternatives can help, but given the current fee levels, there’s no obvious drag from costs holding back performance.

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