A globally diversified equity portfolio with a strong value and small cap tilt for growth focus
Report created on Nov 7, 2024Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 40.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 20.00% -
AV American Century ETF Trust - Avantis U.S. Large Cap Value ETF
AVLV - US0250723493 14.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 12.00% -
AV Avantis International Large Cap
AVIV - US0250723642 8.00% -
AV Avantis® Emerging Markets Value ETF
AVES - US0250723725 6.00%
This portfolio is 99% in stocks via six ETFs, with no meaningful cash or bonds, so it behaves like an all‑equity growth portfolio. The largest position is a broad global stock fund at 40%, with the rest in value‑tilted funds across different regions and sizes. For a “balanced” risk label, this is more aggressive than typical mixed stock‑bond benchmarks, which usually hold 40–60% bonds. That stock‑heavy tilt matters because it drives bigger swings in account value. Someone wanting smoother ups and downs could blend in more defensive assets, while someone comfortable with volatility might keep this structure but plan for larger short‑term drops.
Growth
Historically, this mix shows a strong compound annual growth rate (CAGR) of about 11.97%. CAGR is like averaging your speed on a road trip: it tells you how fast your money grew per year, assuming steady growth, even though markets were bumpy. A hypothetical $10,000 could have grown to around $31,000 over 10 years at that rate, beating many balanced benchmarks that include bonds. The worst historical fall, a max drawdown of about –23%, is actually moderate for an all‑equity setup. Still, past returns are not a promise; they mostly show that this style has been rewarded in the recent period but could lag in other environments.
Projection
The Monte Carlo simulation ran 1,000 “what if” futures using historical return and volatility patterns to stress‑test outcomes. Monte Carlo is basically rolling the dice many times with past‑like returns to see a range of possible end values. The results are encouraging: 982 simulations finished positive, and the average annualized return across them was about 12.51%. The 5th percentile outcome, around 33.1% growth, reflects a rough‑case scenario, while the median outcome near 334% reflects a more typical path. Still, simulations lean heavily on past data; they can’t predict new crises or regime shifts, so they’re best used as guardrails, not guarantees.
Asset classes
- Stocks 99%
With 99% in stocks and effectively 0% in bonds or cash, the asset‑class mix is very growth‑oriented. Compared with broad “balanced” benchmarks that hold meaningful fixed income, this setup will usually outperform in strong equity markets but fall more sharply in bear markets. The positive side is that this aligns well with long time horizons, where stocks historically have higher returns. The trade‑off is comfort with volatility and sequence risk (bad returns early in a goal period). Someone seeking more benchmark‑like stability could slowly add a defensive sleeve over time, while a long‑horizon growth investor might instead focus on staying disciplined through downturns.
Sectors
- Financials 20%
- Technology 16%
- Industrials 15%
- Consumer Discretionary 14%
- Energy 9%
- Basic Materials 7%
- Telecommunications 6%
- Health Care 6%
- Consumer Staples 4%
- Utilities 2%
- Real Estate 2%
Sector exposure is broadly spread: financials ~20%, technology ~16%, industrials ~15%, consumer cyclicals ~14%, with the rest scattered across energy, materials, communication, healthcare, defensive areas, utilities, and real estate. This looks well‑balanced and aligns closely with global standards, rather than making a big single‑sector bet. That’s helpful because sector cycles can be brutal; for example, a tech‑heavy profile can get hit hard when interest rates rise. The modest tilt toward economically sensitive sectors (financials, cyclicals, industrials) fits a value‑oriented equity style. Someone worried about recession risk could choose to moderate cyclical exposure over time, while growth‑oriented investors might be happy riding these cycles for higher potential returns.
Regions
- North America 62%
- Europe Developed 15%
- Japan 8%
- Asia Emerging 6%
- Asia Developed 4%
- Australasia 2%
- Africa/Middle East 2%
- Latin America 1%
Geographically, about 62% is in North America, with the rest spread across developed Europe and Japan plus smaller slices in Asia ex‑Japan, emerging markets, and other regions. This is similar to common global benchmarks, where the U.S. dominates, so the regional mix is well‑aligned with global market weights. That U.S. tilt has helped over the last decade, but it also ties fortunes closely to one economy and currency. The positive news is that international and emerging allocations still play a meaningful role, adding diversification and exposure to different growth drivers. Someone wanting to reduce home‑country bias could gently raise non‑U.S. weights, while others might accept the U.S. tilt as intentional.
Market capitalization
- Mega-cap 24%
- Mid-cap 23%
- Large-cap 22%
- Small-cap 18%
- Micro-cap 11%
The size breakdown is nicely spread: roughly 24% mega, 22% big, 23% medium, 18% small, and 11% micro caps. This is far more tilted to small and micro companies than a typical global index, which is dominated by mega and large caps. Small and value‑oriented stocks can offer higher long‑term return potential but often swing more and can underperform for long stretches. This allocation is well‑balanced and aligns closely with factor‑investing ideas focused on size and value. Someone comfortable with tracking‑error versus broad indexes may enjoy this tilt, while anyone wanting to “hug the benchmark” more might scale back small and micro exposures.
Redundant positions
-
High correlationAvantis International Large CapAvantis® International Small Cap Value ETF
Most holdings move together because they are all stock funds, but there’s especially high correlation between the two international value funds, which cover similar regions and styles. Correlation measures how much things move in sync; if two positions are highly correlated, holding both doesn’t add much diversification when markets drop. The note about overlapping holdings is important: simplifying overlapping pieces can keep the same overall style while reducing clutter and potential redundancy. That said, some overlap is normal in diversified portfolios. Someone wanting a more streamlined setup could consolidate similar funds, focusing on keeping the desired regional and style tilts with fewer moving parts.
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 called the Efficient Frontier, this mix likely sits on the higher‑risk, higher‑return end among all‑equity combinations. The Efficient Frontier is just the curve of best possible risk‑return trade‑offs using the existing ingredients; shifting along it means changing weights, not adding new products. Given the high stock share and factor tilts, there might be slightly smoother combinations with similar expected return but marginally lower volatility, especially if overlapping international value positions are cleaned up. Still, the current setup is quite coherent: it targets equity growth with diversified sectors and regions. “Efficiency” here is purely about risk versus return, not taxes, simplicity, or personal comfort.
Dividends
- Avantis® International Small Cap Value ETF 3.30%
- Avantis® Emerging Markets Value ETF 3.70%
- Avantis International Large Cap 2.50%
- American Century ETF Trust - Avantis U.S. Large Cap Value ETF 1.40%
- Avantis® U.S. Small Cap Value ETF 1.60%
- Vanguard Total World Stock Index Fund ETF Shares 1.70%
- Weighted yield (per year) 2.01%
The overall dividend yield is about 2.0%, with the value‑tilted funds, especially international and emerging, kicking out higher yields around 2.5–3.7%. Dividends are cash payouts from companies, and they can be a nice “paycheck” or, when reinvested, a quiet driver of long‑term growth. For an equity‑heavy, value‑tilted mix, this level of yield looks healthy and in line with expectations. It won’t fully smooth volatility like bond income would, but it does contribute meaningfully to total return. Someone focused on growth can keep reinvesting these payouts, while an income‑minded investor could eventually direct them to cash once withdrawals become a goal.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Avantis® Emerging Markets Value ETF 0.36%
- Avantis International Large Cap 0.25%
- American Century ETF Trust - Avantis U.S. Large Cap Value ETF 0.15%
- Avantis® U.S. Small Cap Value ETF 0.25%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.18%
Total ongoing costs (TER) sit around 0.18%, driven down by the low‑fee global core ETF and slightly higher‑fee value‑tilted funds. That’s impressively low for a factor‑tilted global equity portfolio and compares very well against many active strategies. Costs matter because they come off returns every year, like a slow leak in a tire; shaving even a few tenths of a percent can add up significantly over decades. This cost profile supports better long‑term performance and suggests the structure is already efficient from a fee perspective. Further cost cutting would mainly come from simplifying overlapping funds, but that should be weighed against any loss of style precision.
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