A growth-focused portfolio with diverse global exposure and moderate risk profile

Report created on Jan 16, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

This portfolio is composed of a mix of ETFs primarily focused on equities, with a smaller allocation to bonds and real estate. Nearly 90% of the portfolio is invested in stocks, offering a strong emphasis on growth. This composition is typical for growth-oriented portfolios, aiming for capital appreciation. However, the bond allocation is minimal, which may limit income stability. Consider increasing bond exposure for more balance and to cushion against market volatility.

Growth Info

Historically, the portfolio has achieved a CAGR of 10.81%, which is impressive and suggests strong growth potential. However, it experienced a significant maximum drawdown of -34.63%, indicating vulnerability during market downturns. This performance aligns with the growth profile, which typically involves higher volatility. To mitigate risks, consider adding more stable assets or diversifying further to reduce drawdown during market stress.

Projection Info

Forward projections using Monte Carlo simulations suggest an annualized return of 6.78%. The simulations use historical data to forecast potential outcomes, but they can't predict future events with certainty. The 50th percentile projection shows potential growth, but the 5th percentile warns of possible losses. These projections emphasize the need for a well-rounded strategy that considers both expected returns and potential risks.

Asset classes Info

  • Stocks
    89%
  • Real Estate
    6%
  • Bonds
    4%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards equities at 89%, with real estate making up 6% and bonds at nearly 4%. This allocation supports growth but may lack sufficient diversification benefits usually obtained from bonds and other asset classes. To enhance diversification and potentially smooth returns, consider increasing allocations to bonds or other alternative investments.

Sectors Info

  • Technology
    20%
  • Financials
    14%
  • Industrials
    12%
  • Health Care
    10%
  • Real Estate
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Utilities
    4%
  • Basic Materials
    4%
  • Energy
    4%

The sector allocation is diverse, with a notable concentration in technology at nearly 20%, followed by financial services and industrials. This sector mix aligns with growth trends but may expose the portfolio to sector-specific risks, particularly in tech, which can be volatile. Reassessing sector weights and considering more balanced exposure could enhance stability and reduce sector-specific vulnerabilities.

Regions Info

  • North America
    68%
  • Europe Developed
    13%
  • Japan
    5%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio has significant geographic exposure to North America at 68%, followed by Europe Developed and Japan. This bias towards North America aligns with many global benchmarks but may limit benefits from emerging market growth. To capitalize on global growth opportunities, consider increasing exposure to underrepresented regions, such as emerging markets, which can offer diversification and potential for higher returns.

Redundant positions Info

  • iShares MSCI EAFE Value ETF
    Vanguard FTSE Europe Index Fund ETF Shares
    Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares
    iShares MSCI EAFE Growth ETF
    Vanguard FTSE Developed Markets Index Fund ETF Shares
    High correlation
  • Vanguard Small-Cap Growth Index Fund ETF Shares
    Vanguard Mid-Cap Growth Index Fund ETF Shares
    High correlation
  • Vanguard Mid-Cap Value Index Fund ETF Shares
    Vanguard Value Index Fund ETF Shares
    Vanguard Small-Cap Value Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated asset groups, particularly among international and small-cap ETFs. High correlation can limit diversification benefits, as assets may move in tandem during market downturns. To improve diversification, consider reducing overlap by choosing less correlated assets, which can help mitigate risks and enhance portfolio resilience.

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.

Optimization analysis suggests that removing highly correlated assets could enhance efficiency. The current portfolio's expected return is below the optimal level achievable with the same risk. By adjusting asset weights and reducing overlap, the portfolio could achieve a better risk-return ratio. This approach focuses on maximizing returns without increasing risk.

Dividends Info

  • Vanguard Total International Bond Index Fund ETF Shares 4.20%
  • iShares MSCI EAFE Growth ETF 0.90%
  • iShares MSCI EAFE Value ETF 2.90%
  • iShares Broad USD High Yield Corporate Bond ETF 6.20%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.40%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.40%
  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 4.40%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 4.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.40%
  • Vanguard FTSE Europe Index Fund ETF Shares 2.50%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 4.20%
  • Vanguard Mortgage-Backed Securities Index Fund ETF Shares 3.30%
  • Vanguard Real Estate Index Fund ETF Shares 3.90%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 1.50%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Pacific Index Fund ETF Shares 3.10%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 1.20%
  • Vanguard Value Index Fund ETF Shares 2.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 5.00%
  • Weighted yield (per year) 1.82%

The portfolio's dividend yield is 1.82%, which is relatively low, reflecting its growth focus. While dividends provide a steady income stream, growth portfolios often prioritize capital gains. If income generation is a goal, consider integrating higher-yielding assets. Balancing growth with income can offer a more comprehensive approach to wealth accumulation.

Ongoing product costs Info

  • Vanguard Total International Bond Index Fund ETF Shares 0.07%
  • iShares MSCI EAFE Growth ETF 0.36%
  • iShares MSCI EAFE Value ETF 0.34%
  • iShares Broad USD High Yield Corporate Bond ETF 0.08%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard FTSE Europe Index Fund ETF Shares 0.13%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Mortgage-Backed Securities Index Fund ETF Shares 0.04%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard FTSE Pacific Index Fund ETF Shares 0.08%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 0.08%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 0.20%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports long-term performance. Low costs mean more returns stay in the portfolio, compounding over time. Maintaining a focus on cost-efficient investments is crucial, as higher fees can erode returns. Regularly review and compare fund expenses to ensure cost-effectiveness.

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