A growth-focused portfolio with strong US exposure and a modest international allocation

Report created on Dec 6, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of four ETFs, with a significant focus on US equities. The Vanguard S&P 500 ETF holds the largest portion at 40%, emphasizing large-cap US stocks. The Avantis U.S. Small Cap Value ETF and Invesco QQQ Trust each account for 20%, adding exposure to small-cap value and large-cap growth stocks, respectively. The remaining 20% is invested in the Vanguard Total International Stock Index Fund, providing global diversification. This structure highlights a growth-oriented approach, balancing large-cap stability with small-cap and international growth potential. For better balance, consider adding fixed-income assets to reduce volatility.

Growth Info

Historically, this portfolio has shown strong performance with a compound annual growth rate (CAGR) of 17.4%. However, it also experienced a maximum drawdown of -34.84%, indicating significant volatility. This performance suggests the portfolio has benefited from a robust equity market, particularly in the US. While past performance can offer insights, it does not guarantee future results, and market conditions can change. To mitigate potential risks, consider diversifying into less volatile asset classes and maintaining a balanced approach to growth and stability.

Projection Info

The Monte Carlo simulation, which uses historical data to estimate future outcomes, suggests a wide range of potential returns. With 1,000 simulations, the 5th percentile projects a 67.48% return, while the 67th percentile projects a 1,129.29% return. This variance reflects the inherent uncertainty of market conditions. While the median simulation shows a promising 708.96% return, it's crucial to remember these projections are not predictions. They serve as a tool to understand possible scenarios. Diversifying across asset classes and geographies can help manage risks and improve outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with 99.6% in stocks, leaving minimal allocation to cash and other assets. This concentration can be advantageous for growth but increases exposure to market volatility. A more balanced allocation, including bonds or other fixed-income securities, can provide stability and reduce risk. Diversification across asset classes helps cushion against market downturns and provides more consistent returns over time. Consider reallocating a portion of equity holdings into fixed-income investments to enhance the portfolio's risk-adjusted performance.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Telecommunications
    8%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio spans several sectors, with a notable concentration in technology at 27.3%. Financial services and consumer cyclicals also hold significant positions, at 15.2% and 12.2%, respectively. This sectoral distribution reflects a growth-oriented strategy, capitalizing on sectors with high potential returns. However, such concentration can expose the portfolio to sector-specific risks. Balancing sector allocations can mitigate these risks and enhance resilience. Consider increasing exposure to underrepresented sectors like utilities or real estate to achieve a more balanced sectoral distribution.

Regions Info

  • North America
    80%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, comprising 80.4% of the allocation. This heavy reliance on the US market can lead to concentration risk. While the portfolio does include international exposure, with 8.3% in Europe and smaller allocations in Asia and other regions, further diversification could enhance stability. Expanding geographic allocation to emerging markets or underrepresented regions can provide new growth opportunities and reduce dependence on the US market. Consider increasing exposure to non-US markets to achieve a more globally diversified portfolio.

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.

Optimization using the Efficient Frontier suggests potential for improved risk-return balance by adjusting current asset allocations. This concept involves finding the best possible risk-return ratio by reallocating within existing assets. While the portfolio is growth-focused, optimizing for efficiency might mean shifting weights towards less volatile assets or underrepresented sectors. The goal is to achieve a better balance between risk and return, not necessarily to diversify further. Regularly revisiting and adjusting allocations based on market conditions and personal risk tolerance can optimize performance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco QQQ Trust 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.48%

With a total dividend yield of 1.48%, this portfolio offers moderate income potential through dividends. The Vanguard Total International Stock Index Fund contributes the highest yield at 2.9%, while others offer lower yields. Dividends can provide a steady income stream and enhance total returns, especially in volatile markets. However, the focus on growth-oriented ETFs means dividends are not the primary return driver. For investors seeking higher income, consider increasing allocation to high-dividend stocks or income-focused funds. Balancing growth and income can improve portfolio resilience.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The total expense ratio (TER) for this portfolio is 0.12%, reflecting low costs typical of ETFs. The Vanguard S&P 500 ETF has the lowest cost at 0.03%, while the Avantis U.S. Small Cap Value ETF is the highest at 0.25%. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. Regularly reviewing and optimizing the cost structure can enhance portfolio efficiency. Consider replacing high-cost holdings with lower-cost alternatives without compromising on diversification or return potential.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey