A growth-focused portfolio with strong global diversification and efficient cost structure
Report created on Dec 26, 2024Risk profile
5/7
Diversification profile
4/5
Positions
-
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 75.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 18.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 7.00%
The portfolio is heavily weighted towards equities, with a significant 75% allocation in the Vanguard Total World Stock Index Fund ETF. This provides broad market exposure. The remaining allocations are 18% in Avantis U.S. Small Cap Value ETF and 7% in Avantis International Small Cap Value ETF, adding a small-cap tilt. Compared to typical growth portfolios, this composition leans towards global equity exposure, with minimal allocations in bonds or cash. This setup is aligned with a growth-oriented strategy, aiming for capital appreciation over time.
Growth
Historically, the portfolio has demonstrated robust performance with a Compound Annual Growth Rate (CAGR) of 13.84%. This indicates strong growth over time, especially when compared to common benchmarks. However, the maximum drawdown of -37.27% highlights periods of significant volatility. This is typical for equity-heavy portfolios, which can experience sharp declines during market downturns. Investors should be prepared for such fluctuations and consider their risk tolerance when evaluating past performance.
Projection
Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a median return of 406.58%. Monte Carlo analysis uses historical data to simulate future scenarios, providing a probabilistic view of potential returns. While the simulations indicate a high likelihood of positive outcomes, with 968 out of 1,000 scenarios showing gains, it's important to note that past performance does not guarantee future results. Investors should use these projections as a guide, not a certainty.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is overwhelmingly composed of stocks, accounting for 99.24% of the allocation. This heavy equity exposure suggests a focus on growth, but it also implies higher volatility compared to more diversified portfolios. While this aligns with growth objectives, it may limit defensive capabilities during downturns. Balancing with other asset classes like bonds could provide stability, though it may reduce potential returns. Investors should weigh their risk tolerance against their growth ambitions.
Sectors
- Technology 20%
- Financials 19%
- Industrials 13%
- Consumer Discretionary 12%
- Health Care 8%
- Energy 6%
- Telecommunications 6%
- Basic Materials 6%
- Consumer Staples 6%
- Real Estate 2%
- Utilities 2%
Sector allocations are fairly balanced, with notable weights in technology (19.87%), financial services (18.54%), and industrials (13.02%). This distribution aligns well with global benchmarks, suggesting a diversified approach. However, the tech-heavy focus could lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. Maintaining a diverse sector allocation helps mitigate sector-specific risks and can provide smoother returns over time.
Regions
- North America 68%
- Europe Developed 14%
- Japan 6%
- Asia Emerging 5%
- Asia Developed 3%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is predominantly exposed to North America (67.72%), with additional allocations in Europe and Asia. This reflects a strong focus on developed markets, providing stability and growth potential. However, emerging markets are underrepresented, which may limit exposure to higher growth opportunities. A more balanced geographic distribution could enhance diversification and capture broader global economic trends. Investors should consider their comfort with regional risks.
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 could be optimized using the Efficient Frontier, which suggests the best possible risk-return ratio based on current assets. This involves adjusting the weights of existing holdings to achieve a more desirable balance between risk and return. While the current portfolio is growth-oriented, exploring optimization could enhance performance by identifying more efficient allocations. Investors should consider whether these changes align with their risk tolerance and investment goals.
Dividends
- Avantis® International Small Cap Value ETF 4.30%
- Avantis® U.S. Small Cap Value ETF 1.60%
- Vanguard Total World Stock Index Fund ETF Shares 1.90%
- Weighted yield (per year) 2.01%
The portfolio's overall dividend yield is 2.01%, with contributions from all three ETFs. Dividends provide a steady income stream, which can be reinvested for compounding growth or used as cash flow. This yield is modest, reflecting the growth focus of the portfolio. For investors seeking income, increasing exposure to higher-yield assets could be beneficial. However, this might shift the portfolio's growth orientation towards a more income-focused strategy.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Avantis® U.S. Small Cap Value ETF 0.25%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.12%
The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.12%. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Low fees are crucial for maximizing net gains, especially in growth-focused portfolios. Maintaining this low-cost approach is advisable, but investors should periodically review their holdings to ensure that the cost advantages are sustained without compromising investment quality.
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