A growth-focused portfolio with broad diversification and a strong emphasis on equities

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 heavily weighted towards equities, with a significant 60% allocation to the Vanguard Total Stock Market Index Fund ETF. The remaining assets are distributed among international stocks and small-cap value ETFs. Such a composition is typical for growth-focused portfolios, aiming to capitalize on potential high returns from equity markets. The reliance on ETFs helps in maintaining diversification while keeping costs low. For those seeking capital appreciation, this setup provides a solid foundation. However, it is crucial to monitor the equity-heavy nature, as it may increase vulnerability to market volatility.

Growth Info

Historically, the portfolio has shown impressive growth, with a compound annual growth rate (CAGR) of 14.9%. This indicates strong performance over time, though it's important to note the maximum drawdown of -35.96%, highlighting potential volatility. The portfolio has achieved 90% of its returns in just 16 days, suggesting a reliance on significant market movements. While past performance is not a guarantee of future results, understanding these trends can help set realistic expectations for potential returns and risks.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a range of potential returns for this portfolio. With 1,000 simulations, the portfolio shows an annualized return of 15.21%, with the majority of simulations yielding positive results. Such projections provide a probabilistic view of future performance, helping investors assess potential risks and returns. However, it's essential to remember that these are based on past data and market conditions, which may not always predict future events accurately.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is overwhelmingly in stocks at 99.42%, with minimal exposure to bonds and cash. This heavy stock allocation supports the growth objective but also increases exposure to market fluctuations. Diversification across asset classes can help reduce risk, but this portfolio's focus on equities suggests a tolerance for higher volatility. Investors may consider incorporating more fixed-income assets or cash equivalents to balance risk and enhance stability, especially during market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    17%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    5%
  • Real Estate
    3%
  • Utilities
    2%

With a diverse sectoral allocation, the portfolio is well-spread across technology, financial services, and industrials, among others. Technology leads the way at 22.53%, reflecting its growth potential. A broad sectoral spread can mitigate sector-specific risks, though it’s important to be mindful of over-concentration in any single sector. Regularly reviewing sector performance and adjusting allocations can help maintain balance and capitalize on emerging opportunities in various industries.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Japan
    5%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, which comprises 72.02% of the allocation. This provides stability from a well-developed market but limits exposure to potentially high-growth regions. While there is some diversification with allocations in Europe, Asia, and other regions, increasing exposure to emerging markets could enhance growth potential. Balancing geographic exposure can help mitigate regional risks and capitalize on global economic trends.

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 potentially be optimized using the Efficient Frontier to improve the risk-return ratio. This involves adjusting the current asset allocation to achieve the best possible balance between risk and return based on historical performance. While the current setup is already growth-oriented, fine-tuning allocations can help enhance efficiency. However, it's important to note that optimization is based on historical data and may not account for future market conditions or individual investment goals.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.74%

The portfolio has a moderate dividend yield of 1.74%, contributing to overall returns. Dividends provide a steady income stream, which can be particularly beneficial during periods of market volatility. While growth is the primary objective here, reinvesting dividends can enhance compounding effects and improve long-term performance. Investors might consider balancing growth and income-generating assets to maintain a steady cash flow while pursuing capital appreciation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.08%. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. The use of low-cost ETFs contributes to this efficiency, allowing for broad market exposure without significant expense. Investors should continue to monitor expense ratios and seek opportunities to reduce costs further, ensuring that more of their investment returns are retained.

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