A growth-focused portfolio with significant S&P 500 exposure and moderate international diversification

Report created on Jan 11, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, comprising 75% of the total allocation. The remaining portion is spread across three other ETFs, with the Vanguard Extended Market Index Fund ETF and the Vanguard Total International Stock Index Fund ETF Shares each holding 10%, and the Avantis U.S. Small Cap Value ETF at 5%. This composition leans significantly towards large-cap U.S. equities, reflecting a common growth-focused strategy. While this aligns well with a growth profile, it may benefit from further diversification to reduce reliance on U.S. large-cap stocks.

Growth Info

Historically, the portfolio has performed strongly, with a Compound Annual Growth Rate (CAGR) of 15.36%. This impressive growth rate suggests that the portfolio has captured significant market gains over the years. However, the maximum drawdown of -35.25% highlights potential volatility during market downturns. This performance trend is consistent with a growth-focused strategy, which often experiences higher volatility in exchange for higher returns. Comparing these results to a benchmark like the S&P 500 can provide additional context on relative performance.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes. With 1,000 simulations, the portfolio's annualized return is estimated at 14.35%, with a 67th percentile return of 584.24%. However, the 5th percentile shows a much lower return of 10.78%, illustrating the uncertainty inherent in future market conditions. Monte Carlo simulations use historical data to project future outcomes, but it's important to remember that past performance doesn't guarantee future results. These projections can help in setting realistic expectations for portfolio performance.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with 99.59% allocated to equities. This heavy equity allocation aligns with a growth-oriented strategy, aiming for higher returns at the expense of increased risk. While stocks offer the potential for significant appreciation, the lack of diversification across asset classes may expose the portfolio to greater volatility. Incorporating other asset classes, such as bonds or real estate, could help balance risk and enhance stability, especially during market downturns.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio's sector allocation is heavily concentrated in technology, which makes up 28.38% of the total. This is followed by financial services, consumer cyclicals, and healthcare. This distribution suggests a focus on sectors with high growth potential, but it may also increase exposure to sector-specific risks. Technology-heavy portfolios, for example, can be more volatile during periods of regulatory change or interest rate fluctuations. Balancing sector weights could mitigate these risks and enhance overall portfolio stability.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly invested in North America, with 90.08% exposure. This heavy concentration in a single region could limit the benefits of geographic diversification. While the U.S. market has historically been strong, diversifying into other regions could reduce risk and potentially capture growth in emerging markets. A more balanced geographic allocation may help mitigate regional economic downturns and currency fluctuations, offering a more stable return profile over time.

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, which seeks the best possible risk-return ratio. This involves adjusting the asset allocation to achieve a balance where the expected return is maximized for a given level of risk. While the current portfolio leans heavily towards U.S. equities, exploring different allocations among existing assets could enhance efficiency. This doesn't necessarily mean adding new investments but rather tweaking the proportions to better align with the desired risk-return profile.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Extended Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.50%

The portfolio's dividend yield stands at 1.5%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.4%. While dividends are a modest component of the portfolio's total return, they provide a steady income stream, which can be particularly appealing during periods of market volatility. For growth-focused investors, reinvesting dividends can further enhance compounding returns. However, the primary focus remains on capital appreciation rather than income generation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is remarkably low at 0.05%, primarily due to the low-cost Vanguard ETFs. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Lower expenses mean more of the portfolio's gains are retained by the investor, compounding over time to significantly impact wealth accumulation. Maintaining this low-cost approach is beneficial, but it's always wise to periodically review and ensure that the portfolio continues to offer value relative to its cost.

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