A growth-focused portfolio with strong U.S. bias and moderate international diversification

Report created on Dec 27, 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 primarily consists of ETFs, with a significant 60% allocation to the Vanguard S&P 500 ETF. The remaining investments include a 20% stake in the Vanguard Total International Stock Index Fund, 10% in Avantis U.S. Small Cap Value ETF, and 10% in Vanguard Information Technology Index Fund ETF. Compared to a typical growth portfolio, this composition leans heavily towards large-cap U.S. equities, with a moderate allocation to international and small-cap stocks. To enhance diversification, consider increasing exposure to other asset classes such as bonds or alternative investments, which can help cushion against market volatility and provide more balanced growth.

Growth Info

Historically, this portfolio has achieved a commendable Compound Annual Growth Rate (CAGR) of 16.09%, indicating strong performance over the long term. However, it has also experienced a significant maximum drawdown of -34.77%, highlighting vulnerability during market downturns. This performance suggests that while the portfolio has potential for substantial growth, it is also susceptible to significant fluctuations. Comparing this to common benchmarks like the S&P 500, which had a similar drawdown during major market events, this portfolio's performance aligns well with growth expectations. To mitigate drawdown risks, consider incorporating more defensive assets.

Projection Info

The forward projection using Monte Carlo simulation, which analyzes potential future outcomes based on historical data, suggests an annualized return of 18.82%. With 984 out of 1,000 simulations showing positive returns, the portfolio exhibits a promising outlook. However, it's important to note that past performance is not indicative of future results, and simulations are based on historical trends that may not repeat. To improve future outcomes, regularly reassess the portfolio's alignment with evolving market conditions and personal financial goals, adjusting allocations as necessary to optimize risk and return.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily weighted towards stocks, accounting for 99.5% of the total allocation. This concentration in equities can drive growth but also increases exposure to market volatility. Compared to a balanced portfolio, which typically includes a mix of equities, fixed income, and other assets, this portfolio is less diversified across asset classes. To reduce risk and enhance stability, consider diversifying into bonds or real assets, which can provide income and act as a hedge against stock market fluctuations, especially during economic downturns.

Sectors Info

  • Technology
    33%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sectoral allocation shows a strong emphasis on technology, comprising 33% of the portfolio, followed by financial services and consumer cyclicals. This tech-heavy focus aligns with growth strategies but may lead to higher volatility, particularly during periods of interest rate hikes or regulatory changes. In comparison, a more balanced sector allocation might include greater exposure to defensive sectors like healthcare or utilities. To better manage sector risks, consider diversifying investments across a broader range of industries, which can help stabilize returns and capitalize on different economic cycles.

Regions Info

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

Geographically, the portfolio is predominantly focused on North America, with 81% exposure, followed by smaller allocations in Europe and Asia. This concentration in U.S. markets limits international diversification, which could impact performance during regional economic downturns. Compared to global benchmarks, which typically have more balanced geographic exposure, this portfolio could benefit from increased investments in emerging markets or other regions with growth potential. Expanding geographic diversification can reduce risk and enhance opportunities for capturing returns from global economic growth.

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's current allocation can be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return balance with the existing assets. By adjusting the weightings among the ETFs, the portfolio could potentially enhance returns for a given level of risk or reduce risk for a target return. This optimization doesn't necessarily involve adding new assets but rather reallocating the current investments to improve efficiency. Regularly reassess the portfolio's alignment with the Efficient Frontier to ensure it remains optimized as market conditions and personal goals evolve.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.60%

With a total dividend yield of 1.6%, the portfolio provides a modest income stream, primarily driven by the Vanguard Total International Stock Index Fund's 3.3% yield. While dividends can offer a steady income, this yield is relatively low for income-focused investors. For those seeking higher income, consider incorporating dividend-focused funds or stocks with higher yields. However, it's essential to balance the desire for income with growth objectives, as high-yield investments may come with increased risk or limited growth potential. Evaluate dividend strategies to align with your financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's Total Expense Ratio (TER) is impressively low at 0.07%, indicating efficient cost management. This low-cost structure supports better long-term performance by minimizing fees that can erode returns over time. Compared to industry averages, which often exceed 0.2% for similar ETF portfolios, this cost efficiency is a significant advantage. To maintain this benefit, regularly review the portfolio for any changes in fees and consider replacing higher-cost assets with more cost-effective alternatives. Keeping expenses low is crucial for maximizing net returns and achieving financial goals.

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