A globally diversified growth tilted portfolio with moderate alternatives and low overall costs

Report created on Nov 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

Observation: The portfolio is equity heavy with 54% in a US total market ETF and 36% in an international market ETF plus two smaller alternative ETFs at 5% each. Asset-class weights read 91% stocks 6% cash 3% bonds and 1% other. Education: A concentrated equity tilt increases expected long‑term returns but also raises short‑term volatility and sensitivity to equity market drawdowns. Recommendation: Consider whether the equity weight matches the target risk profile and horizon; if seeking smoother ride, modestly raise bond or cash allocations or increase alternative diversifiers while keeping the core equity exposure intact.

Growth Info

Observation: Reported CAGR is 12.75% with a max drawdown of −20.49% and 22 days accounting for 90% of returns. Education: CAGR, or Compound Annual Growth Rate, shows average annual growth like average speed on a long trip; max drawdown measures the largest peak‑to‑trough loss. For example a $10,000 investment growing at 12.75% annually for ten years would roughly triple in value while experiencing periodic sharp drops. Recommendation: Use these numbers to set realistic expectations and position sizing rules; ensure emergency cash or bond buffers align with the historical drawdown tolerance implied by this volatility.

Projection Info

Observation: Monte Carlo simulations used 1,000 runs producing a median ending value of 272% and a 5th percentile of 27.5% with an annualized simulated return of 10.77%. Education: Monte Carlo uses random sampling based on historical return patterns to estimate a range of possible futures not a prediction; it shows probabilistic outcomes like weather forecasts. Recommendation: Treat the percentiles as scenarios for planning rather than guarantees; use the distribution to stress test goals and adjust savings rates or asset mix rather than relying on a single expected return number.

Asset classes Info

  • Stocks
    91%
  • Cash
    6%
  • Bonds
    3%
  • Other
    1%

Observation: With 91% equities and small allocations to bonds cash and others this portfolio is far more equity tilted than a classic balanced mix. Education: Heavy equity weight typically raises expected long‑term returns but also increases sequence‑of‑returns risk for investors drawing income. A balanced benchmark often sits around 60% equities and 40% fixed income. Recommendation: If liquidity or capital preservation is important in the medium term consider increasing bond or cash cushions stepwise or introduce low‑cost broad fixed income to help dampen volatility while preserving growth potential.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

Observation: Sector exposure is concentrated with Technology at 24% and Financials at 15% followed by Industrials and Consumer Cyclicals. Education: Sector tilts matter because sectors react differently to macro shifts — for example tech can surge in growth cycles yet stumble during rising interest rates. High concentration in a few sectors can amplify portfolio moves beyond overall market swings. Recommendation: Review sector concentration versus a chosen benchmark and rebalance if the tilt is unintentional; if the tilt is intentional, document the rationale and acceptable deviation bands to manage future drift.

Regions Info

  • North America
    57%
  • Europe Developed
    13%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Observation: Geographic exposure is dominated by North America at 57% with developed Europe and parts of Asia making up most of the remainder while emerging markets and Latin America are small. Education: Geographic diversification reduces country or region specific risks such as regulatory shifts or currency shocks; a heavy home market bias can increase correlation with domestic economic cycles. Recommendation: Decide whether the North American tilt is intentional and aligned with long‑term views; if broader diversification is desired consider increasing emerging market exposure or rebalancing international holdings to reflect target regional weights.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    28%
  • Mid-cap
    17%
  • Small-cap
    5%
  • Micro-cap
    1%

Observation: Market‑cap mix leans toward large caps with 41% mega and 28% big caps while mediums small and micro together form a smaller share. Education: Large caps typically offer stability and liquidity while mid and small caps can add higher growth potential and diversification but also more volatility and liquidity risk. Recommendation: If the goal is incremental growth and diversification consider a modest allocation shift toward mid and small caps or targeted small‑cap exposures while monitoring turnover and tax impacts.

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.

Observation: The portfolio can likely be moved toward a more efficient risk‑return point by reallocating among the existing assets within constraints using mean‑variance optimization. Education: The Efficient Frontier illustrates portfolios that offer the highest expected return for each level of risk; optimization here means shifting weights among current holdings rather than adding new asset types. Recommendation: Run constrained optimization scenarios that include transaction costs taxes and limits on single holding weights then choose a target point on the frontier that aligns with your risk tolerance time horizon and liquidity needs remembering that efficiency doesn't replace the need for diversification and periodic rebalancing.

Dividends Info

  • iMGP DBi Managed Futures Strategy ETF 4.60%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.84%

Observation: The portfolio’s blended dividend yield is about 1.84% with the managed futures ETF showing a higher reported yield and the core equity ETFs lower yields. Education: Dividends provide current income and can boost total returns through reinvestment; yield levels differ by strategy and are not the sole driver of long‑term performance. Recommendation: If income is a primary objective evaluate higher yield or income‑focused strategies and the sustainability of yields; if growth is primary, prioritize dividend reinvestment to compound returns over time rather than chasing yield alone.

Ongoing product costs Info

  • iMGP DBi Managed Futures Strategy ETF 0.85%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.12%

Observation: The portfolio’s overall reported total expense ratio is low at 0.12% driven by two ultra‑low cost Vanguard ETFs but includes two higher fee alternatives at 0.85% and 0.90%. Education: TER, or Total Expense Ratio, is the annual fee charged by funds and acts like a recurring drag on returns; even small differences compound meaningfully over decades. Recommendation: Review the high fee exposures to confirm they add unique value or diversification that justifies the cost; where similar low‑cost alternatives exist consider replacing expensive holdings or trimming their weight to improve long‑term net returns.

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