Focused two fund equity portfolio with strong US tilt and pronounced small value exposure
Report created on May 4, 2024Risk profile
5/7
Diversification profile
2/5
Positions
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AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 50.00% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 50.00%
This portfolio is a simple two‑fund mix splitting evenly between a broad large‑cap US index and a US small‑cap value fund. That means every dollar is in stocks, but spread across both very large companies and smaller, cheaper ones. A concentrated structure like this is easy to manage and understand, but it also means each holding has a big influence on results. For many growth‑oriented investors, a focused equity mix like this can be appealing, provided they are comfortable with bigger ups and downs. The key takeaway is that this is a high‑conviction, growth‑tilted stock portfolio rather than a broadly diversified, all‑asset solution.
Growth
Over the period shown, $1,000 grew to about $2,387, with a compound annual growth rate (CAGR) of 14.36%. CAGR is like your average speed on a road trip, smoothing out bumps along the way. This slightly beat the US market proxy and clearly outpaced the global market. The trade‑off is a deeper worst drop, or max drawdown, at about ‑40.5% versus roughly ‑34% for the benchmarks. That means the ride has been a bit bumpier than the market while still rewarding patience. Remember though, past returns don’t guarantee future results, especially over a relatively short and favorable period.
Asset classes
- Stocks 100%
All assets are in stocks, with no bonds, cash, or alternative assets. That pure‑equity stance is typical for growth‑oriented strategies but can feel painful in sharp market downturns because there’s no built‑in ballast. Many broad benchmarks mix in lower‑risk assets, so compared with those, this setup leans clearly toward return rather than stability. The upside is maximum long‑term growth potential from owning productive businesses. The downside is that short‑term losses can be substantial, and recovery depends entirely on equities rebounding. Anyone using a structure like this usually benefits from having enough cash or safer assets elsewhere to cover near‑term needs.
Sectors
- Technology 20%
- Financials 19%
- Consumer Discretionary 14%
- Industrials 12%
- Energy 12%
- Health Care 7%
- Telecommunications 7%
- Consumer Staples 5%
- Basic Materials 3%
- Real Estate 1%
- Utilities 1%
Sector exposure is fairly spread out, with technology around one‑fifth and financials, consumer discretionary, industrials, and energy all meaningful. This looks more balanced than a tech‑dominated portfolio and aligns reasonably with diversified US equity patterns, which is a strong indicator of healthy sector diversification. A mix like this reduces vulnerability to any single industry shock, although cyclical sectors (like consumer and industrials) still introduce economic sensitivity. Tech‑heavy periods can boost returns when innovation leaders rally, while financially and industrially tilted segments tend to respond more to interest rates and business cycles. Overall, the sector mix supports growth while avoiding an extreme bet on one theme.
Regions
- North America 98%
- Latin America 1%
- Europe Developed 1%
Geographically, exposure is overwhelmingly in North America, especially the US, with only tiny slices in other regions. Compared with global benchmarks, which spread more across multiple continents, this is a clear home‑country tilt. That has been beneficial in the last decade as US markets outperformed many peers. However, it also ties outcomes closely to the US economy, policy, and currency. If non‑US markets lead in future periods, this kind of concentration might lag more globally diversified setups. The geographic stance works well for someone comfortable with US dominance and willing to accept less diversification across different economic regimes.
Market capitalization
- Small-cap 27%
- Mega-cap 23%
- Micro-cap 23%
- Large-cap 17%
- Mid-cap 10%
Market capitalization exposure is quite unusual: meaningful allocations to small‑cap and even micro‑cap stocks sit alongside substantial mega‑cap exposure. This barbell between very large and very small companies can be powerful, as small and micro‑caps often have higher growth potential but also more volatility and business risk. Large and mega‑caps tend to be more stable and widely researched, anchoring part of the portfolio. Compared with typical broad‑market indices, this structure leans more heavily into the smaller side of the market. That tilt can enhance long‑term return potential but may underperform in flights to safety when investors favor larger, established businesses.
True holdings
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NV NVIDIA Corporation 3.66%
Part of fund(s):- Vanguard S&P 500 ETF
-
AA Apple Inc 3.32%
Part of fund(s):- Vanguard S&P 500 ETF
-
MS Microsoft Corporation 2.48%
Part of fund(s):- Vanguard S&P 500 ETF
-
AM Amazon.com Inc 1.74%
Part of fund(s):- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class A 1.54%
Part of fund(s):- Vanguard S&P 500 ETF
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AV Broadcom Inc 1.29%
Part of fund(s):- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class C 1.23%
Part of fund(s):- Vanguard S&P 500 ETF
-
ME Meta Platforms Inc. 1.20%
Part of fund(s):- Vanguard S&P 500 ETF
-
TS Tesla Inc 0.96%
Part of fund(s):- LS 1x Tesla Tracker ETP Securities GBP
- Vanguard S&P 500 ETF
-
BR Berkshire Hathaway Inc 0.79%
Part of fund(s):- Vanguard S&P 500 ETF
- Top 10 total 18.20%
Looking through the ETFs, the biggest indirect exposures are mega‑cap US names like NVIDIA, Apple, Microsoft, and Amazon, all coming from the large‑cap index side. Several of these appear via the same ETF, which is normal for a cap‑weighted index but still creates meaningful reliance on a handful of giants. Because only top‑10 ETF positions are included, true overlap is likely higher than shown. This concentration can amplify performance in periods when big US leaders are strong, but it also means that setbacks in those names can noticeably affect portfolio returns. It’s important that this reliance on mega‑cap growth leaders matches the intended risk profile.
Factors
Factor exposure shows high tilts to value, size, and quality. Factors are like investing “ingredients” — value means cheaper stocks, size reflects smaller companies, and quality points to stronger balance sheets or profitability. A strong value and size tilt often benefits in periods when cheaper, smaller stocks rebound after growth‑stock booms, though they can lag during mega‑cap growth rallies. The elevated quality exposure can help filter out weaker companies, potentially softening some downside relative to a pure small‑value bet. Neutral readings in momentum, yield, and low volatility suggest the portfolio behaves broadly like the market on those dimensions, with factor risk dominated by the small‑value‑quality mix.
Risk contribution
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Avantis® U.S. Small Cap Value ETF
Weight: 50.00% 59.5% -
Vanguard S&P 500 ETF
Weight: 50.00% 40.6%
Risk contribution highlights that the small‑cap value ETF, despite a 50% weight, contributes almost 60% of overall volatility. Risk contribution measures how much each holding drives portfolio ups and downs, which can differ from simple weights. Here, the small‑cap value slice is clearly the main engine of risk, while the S&P 500 ETF contributes less risk than its weight. That makes sense: smaller, cheaper stocks usually swing more than large diversified blue chips. If the goal is to keep the current return profile but slightly smooth the ride, one lever could be adjusting the balance between these two funds, though that would also shift factor exposure.
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 the risk‑return chart, the current mix sits on or very close to the efficient frontier, with a Sharpe ratio around 0.63. The Sharpe ratio measures return per unit of risk, like miles per gallon for your portfolio. The optimal and minimum‑variance mixes, using the same building blocks, achieve slightly higher Sharpe ratios with lower volatility but also slightly lower expected returns. Since the current allocation is effectively efficient for its chosen risk level, there’s no glaring structural issue to fix. If desired, modest reweighting toward the lower‑risk configurations could reduce swings while keeping expected returns still quite attractive.
Dividends
- Avantis® U.S. Small Cap Value ETF 1.40%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.30%
The portfolio’s overall dividend yield is around 1.3%, with slightly higher income from the small‑cap value fund than from the S&P 500 ETF. Dividend yield represents annual cash payouts as a percentage of price, so this level indicates a growth‑oriented equity mix where returns are expected mainly from price appreciation rather than income. For investors who don’t rely on portfolio income to cover expenses, this can be perfectly fine and tax‑efficient. Those seeking substantial cash flow, however, would likely need either a larger portfolio, a separate income‑focused sleeve, or a different blend of asset types to meet regular spending needs.
Ongoing product costs
- Avantis® U.S. Small Cap Value ETF 0.25%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.14%
Average costs are impressively low, with a blended total expense ratio (TER) around 0.14%. TER is the annual fee charged by funds, and keeping it low is like reducing friction in an engine — more of the portfolio’s return stays in your pocket. Over long horizons, even small fee differences can compound into meaningful sums, so this cost structure strongly supports long‑term performance. Both ETFs used here are competitively priced for their categories, which is a real positive. With costs already at this level, there isn’t much room for meaningful fee improvement without sacrificing strategy quality or diversification.
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