Balanced Growth Portfolio with Strong U.S. Focus and Moderate Risk for Diversified Long-Term Investors

Report created on Nov 30, 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 primarily composed of ETFs with a significant allocation to the Vanguard S&P 500 ETF, making up 70% of the portfolio. This heavy weighting towards large-cap U.S. equities suggests a focus on growth and stability. The inclusion of small-cap value ETFs and international ETFs adds a layer of diversification, albeit with a smaller allocation. This mix indicates a growth-oriented strategy with an emphasis on the U.S. market, supplemented by exposure to international developed and emerging markets. To enhance diversification, consider slightly increasing the allocation to international markets.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 16.0%. This impressive performance is matched by a significant maximum drawdown of -35.33%, highlighting the inherent risk associated with a growth-focused strategy. The portfolio's returns are concentrated in just 16% of the days, suggesting periods of high volatility. While the historical performance is strong, it's essential to be prepared for potential downturns. Maintaining a balanced approach and periodically reassessing risk tolerance can help manage volatility and sustain long-term growth.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses random sampling to assess potential outcomes based on historical data. The results indicate a median (50th percentile) projected return of 363.57%, with a 67th percentile return of 572.45%. The simulation shows that 955 out of 1,000 simulations resulted in positive returns, with an annualized return of 13.88%. While this suggests a favorable outlook, it's crucial to remember that projections are not guarantees. Regular portfolio reviews and adjustments can help align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.56% of the total allocation, with minimal exposure to bonds and other asset classes. This concentration on equities aligns with a growth-focused strategy but may increase volatility. While stocks offer higher growth potential, they are also subject to market fluctuations. To mitigate risk, consider diversifying into other asset classes, such as bonds, which can provide stability and income. Balancing the asset allocation can help smooth out returns and align the portfolio with long-term financial goals.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is well-diversified, with a notable emphasis on technology (25.93%) and financial services (15.93%). This distribution reflects a focus on sectors with strong growth potential. However, it's important to note that sector performance can be cyclical, and overexposure to a few sectors may increase risk. To maintain a balanced portfolio, regularly review sector allocations and consider rebalancing if certain sectors become too dominant. A diversified sector allocation can help manage risk and capture opportunities across various economic cycles.

Regions Info

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

Geographically, the portfolio is heavily weighted towards North America, accounting for 81.05% of the allocation. While this focus on the U.S. market has historically provided strong returns, it may limit exposure to growth opportunities in other regions. The remaining allocation is spread across Europe, Japan, and emerging markets, offering some diversification. To enhance global diversification, consider increasing exposure to international markets, which can provide access to different economic cycles and growth prospects. A well-balanced geographic allocation can help manage risk and capitalize on global opportunities.

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 well-positioned for growth, but there's room for optimization along the efficient frontier. By adjusting allocations, one can achieve a riskier or more conservative profile. For a riskier approach, consider increasing exposure to emerging markets or small-cap equities, which offer higher growth potential but come with increased volatility. Conversely, for a more conservative stance, allocate more to bonds or stable sectors like utilities. Before making changes, ensure that any adjustments align with personal risk tolerance and financial goals, as these are crucial for long-term success.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • 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%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.58%

The portfolio's dividend yield stands at 1.58%, with contributions from various ETFs, such as the Avantis International Small Cap Value ETF at 3.1% and the Vanguard S&P 500 ETF at 1.2%. This yield provides a modest income stream, complementing the growth-focused strategy. While dividends offer stability, they should not be the sole focus in a growth portfolio. To optimize returns, consider reinvesting dividends to compound growth over time. Balancing income and growth can help achieve a well-rounded investment strategy that aligns with long-term financial objectives.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • 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%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is a low 0.07%, reflecting the cost-effective nature of the selected ETFs. This low-cost structure is advantageous for maximizing net returns, as high fees can erode investment gains over time. The Vanguard ETFs, in particular, offer competitive expense ratios, contributing to the portfolio's overall efficiency. While the current cost structure is favorable, it's essential to remain vigilant about fees, especially if considering adding new investments. Keeping costs low is a fundamental principle of successful investing and can significantly impact long-term performance.

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