A strongly value tilted global equity portfolio with broad diversification and moderate overall risk profile

Report created on Nov 7, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is a pure equity mix with 100% in stocks and zero allocation to bonds or cash, tilted heavily toward value and small caps through several focused ETFs. Compared with a typical balanced benchmark, which might hold around 40% bonds, this structure leans more growth‑oriented and volatile, even though it’s labeled “balanced.” That matters because portfolio swings will mainly follow global stock markets without the dampening effect of safer assets. To smooth the ride, someone wanting a more classic balanced feel could add a separate stabilizer bucket, like high‑quality fixed income or short‑term reserves, while still keeping this value‑tilted equity sleeve as the growth engine.

Growth Info

Historically, a $10,000 starting amount growing at an annualized 11.85% Compound Annual Growth Rate (CAGR) would roughly triple over 10 years, which is very strong compared with many broad stock benchmarks. CAGR is like your “average speed” over a long trip, smoothing out the bumps from good and bad years. The max drawdown of about -22% suggests the worst historical drop was significant but not extreme for an all‑equity approach. Only 13 days making up 90% of returns shows how a few strong days drive long‑term gains. Staying invested through volatility is crucial; jumping in and out could easily miss those rare but critical up days.

Projection Info

The Monte Carlo analysis uses random simulations based on historical patterns to explore many possible future paths, a bit like running 1,000 “what if” market scenarios. Here, the 5th percentile ending value at about 49.6% of the starting point shows a tough but survivable downside, while the median around 340% and 67th percentile near 476% highlight strong growth potential. An annualized simulated return of 12.65% is encouraging but not a promise. These projections rely on past data and assumed relationships, which can break in real life. It helps to treat the lower percentile outcomes as stress tests and confirm savings rate, time horizon, and cash reserves would still feel acceptable in those rougher paths.

Asset classes Info

  • Stocks
    100%

All holdings are equities, but there is meaningful spread across styles and company sizes, which creates diversification inside the stock bucket. Compared with a traditional multi‑asset benchmark that mixes stocks and bonds, this approach concentrates risk in one asset class but spreads that risk across many companies and regions. That’s good for long‑run growth but can feel intense during global downturns when almost all stocks fall together. Keeping this lineup as the dedicated “equity slice” is very reasonable, especially since it is broadly diversified; pairing it with a separate low‑risk allocation elsewhere could bring the overall household mix closer to the “balanced” profile score of 4 out of 7.

Sectors Info

  • Financials
    22%
  • Industrials
    16%
  • Consumer Discretionary
    15%
  • Technology
    11%
  • Energy
    10%
  • Basic Materials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Health Care
    4%
  • Real Estate
    1%
  • Utilities
    1%

Sector exposure is nicely spread: financial services, industrials, and consumer cyclicals lead, while technology, energy, and materials also have solid weights. This avoids the common problem of being overly concentrated in a single hot area. Relative to many broad benchmarks that are tech‑heavy, this mix looks more old‑economy and value‑centric. That can shine when interest rates are higher or when cheaper companies rebound, but it may lag during long stretches when growth and mega‑cap tech dominate headlines. For someone happy with this style tilt, simply monitoring that no single sector drifts above a comfort level over time, and occasionally rebalancing back to target weights, can keep risk aligned without constantly tinkering.

Regions Info

  • North America
    58%
  • Europe Developed
    11%
  • Asia Emerging
    11%
  • Asia Developed
    8%
  • Japan
    6%
  • Latin America
    2%
  • Africa/Middle East
    2%
  • Australasia
    2%
  • Europe Emerging
    1%

Geographically, about 58% in North America with the rest spread across developed and emerging markets gives genuinely broad global exposure. This allocation is well‑balanced and aligns closely with global standards, especially considering the added global layer from the total world ETF. Compared with typical US‑heavy portfolios, this mix gives more room to international and emerging markets, which can help if US stocks go through a weaker decade. On the flip side, international value and emerging markets can be more volatile and go through long underperformance streaks. Sticking with such a global tilt usually works best for long‑term investors who are comfortable seeing periods where home‑market news doesn’t match portfolio returns.

Market capitalization Info

  • Mid-cap
    26%
  • Large-cap
    22%
  • Small-cap
    22%
  • Mega-cap
    16%
  • Micro-cap
    14%

The distribution across market caps is quite healthy: meaningful stakes in mega, big, mid, small, and even micro caps. That’s different from many benchmarks that lean heavily toward mega caps only. Smaller companies tend to be more volatile but can offer higher long‑term return potential; value‑tilted small caps especially can be bumpy but rewarding over long horizons. This spread supports diversification within equities and avoids putting everything into the largest household names. Periodically checking that small and micro caps haven’t grown to a level that exceeds comfort—especially after strong runs—can help keep risk in line, while still preserving the intentional tilt toward smaller, cheaper companies.

Redundant positions Info

  • Avantis International Large Cap
    Avantis® International Small Cap Value ETF
    High correlation

Correlation measures how often assets move together; a value near 1 means they typically rise and fall in sync, reducing diversification benefits. Here, the international large and international small value ETFs are flagged as highly correlated, meaning they often react similarly to global news. That’s not automatically bad, because they target different size ranges, but it does suggest some overlap in economic drivers. The note about possibly removing overlapping holdings is less about cutting risk and more about simplifying. Trimming down to fewer, broader funds could keep the same overall strategy—global value across sizes—while making rebalancing easier and reducing the chance of accidental over‑complication.

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.

Risk versus return here can be thought about using the Efficient Frontier: the set of allocations that offers the best return for each level of volatility, given the existing ingredients. Efficiency doesn’t mean maximum diversification or minimal drawdowns; it means the best trade‑off achievable with these current ETFs. Because some holdings are highly correlated, small tweaks—like merging overlapping international value positions—could keep the same style while nudging the mix closer to that frontier. Any optimization would stay within these funds, just shifting percentages, not changing the philosophy. Using past return and volatility data is helpful, but remember it’s only a rough guide; markets can behave very differently than the historical patterns used in these models.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.30%
  • Avantis® Emerging Markets Value ETF 3.70%
  • Avantis International Large Cap 2.50%
  • American Century ETF Trust - Avantis U.S. Large Cap Value ETF 1.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total World Stock Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 2.26%

The overall dividend yield around 2.26% is solid for a value‑tilted equity portfolio, with emerging markets and international small value contributing higher yields north of 3%. Dividends are regular cash payments from companies, which can either be reinvested to buy more shares or taken as income. For growth‑focused investors, reinvesting those dividends helps compound returns over time, like rolling snow building a bigger snowball. For someone needing some cash flow, this level of yield can modestly support withdrawals without selling too many shares. Just remember dividend levels can change with company profits and interest rates, so it’s wise not to rely on them as guaranteed, bond‑like income.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis International Large Cap 0.25%
  • American Century ETF Trust - Avantis U.S. Large Cap Value ETF 0.15%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.24%

With a total expense ratio around 0.24%, costs are impressively low, supporting better long‑term performance. Fees may look tiny in percentage terms, but over decades they add up, like a slow leak in a tire. The blend of ultra‑low cost broad exposure from the world ETF and slightly higher fees on the more specialized value strategies feels reasonable: you’re paying a bit more where active tilts are doing real work. Over time, checking if the value and size tilts are still desired and comparing similar options with lower costs could fine‑tune efficiency, but there’s nothing here that looks out of line or wasteful from a cost perspective.

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