High equity growth focused portfolio led by broad US large caps and a heavy semiconductor tilt
Report created on Sep 17, 2024Risk profile
5/7
Diversification profile
3/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 60.00% -
SM VanEck Semiconductor ETF
SMH - US92189F6768 20.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 10.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 10.00%
Observation: The portfolio is built from four ETFs with a strong concentration in US large caps via a 60% allocation to a broad S&P 500 ETF plus a 20% specialized semiconductor ETF and smaller allocations to US small cap value and international equities. Education: A concentrated ETF mix like this blends broad market exposure with a single high-conviction sector play which can amplify both gains and losses relative to a broad benchmark. Recommendation: Consider whether the current split matches risk targets by potentially reducing single-sector concentration and reallocating modestly toward additional diversified exposures to improve balance.
Growth
Observation: Historic metrics show a compound annual growth rate (CAGR) of 20.55% and a maximum drawdown of −34.40%. Education: CAGR measures average annual growth like an average speed over a trip while max drawdown shows the largest peak-to-trough loss experienced. The portfolio’s high CAGR paired with a deep drawdown signals strong upside but material downside risk. Recommendation: Accept that periods of strong performance can be followed by steep declines; set rebalancing rules and position-sizing limits to lock gains and control exposure so downside shocks are less disruptive to long-term progress.
Projection
Observation: A 1,000-run Monte Carlo simulation — a method that uses repeated random sampling based on historical return patterns to project possible futures — produced a median end value showing substantial upside and 993 of 1,000 simulations with positive returns. Education: Monte Carlo provides scenario ranges not guarantees; it models probability distributions to illustrate variability and tail outcomes but depends heavily on historical inputs and assumed return behavior. Recommendation: Use these simulations for planning and stress-testing assumptions rather than prediction; complement them with worst-case stress scenarios and consider portfolio adjustments that manage downside exposure if the low-percentile outcomes are unacceptable.
Asset classes
- Stocks 100%
Observation: The portfolio is 100% equities with no allocation to bonds cash or alternatives. Education: Asset class diversification (spreading investments across stocks bonds cash and other assets) helps smooth returns because different assets respond differently to economic conditions. A 100% stock allocation typically raises expected returns but also increases volatility and sequence-of-returns risk, especially for nearer-term goals. Recommendation: Align asset-class mix with the chosen risk profile by considering a modest allocation to fixed income or cash buffers for liquidity needs especially if the investor cannot tolerate multi-decade drawdowns.
Sectors
- Technology 44%
- Financials 12%
- Consumer Discretionary 9%
- Industrials 7%
- Telecommunications 7%
- Health Care 6%
- Consumer Staples 4%
- Energy 4%
- Basic Materials 2%
- Utilities 2%
- Real Estate 1%
Observation: Sector weights are heavily tilted toward technology (44%) with meaningful exposure to financials consumer cyclicals and industrials while other sectors are much smaller. Education: Sector concentration can drive performance beyond market beta; technical and cyclical sectors often react strongly to rate changes economic cycles and supply chain shocks which increases portfolio volatility. Recommendation: Decide whether the tech tilt is intentional for higher expected returns; if not, pursue gradual rebalancing or add sector-diversifying exposures to reduce single-sector risk while preserving a growth orientation.
Regions
- North America 87%
- Europe Developed 5%
- Asia Developed 3%
- Asia Emerging 2%
- Japan 2%
Observation: Geographic exposure is markedly domestic with North America at 87% and limited developed and emerging international weights. Education: Geographic diversification reduces country specific risk including regulatory currency and economic cycle risk; being overweight one region can increase sensitivity to local shocks. Recommendation: If broad global diversification is a goal consider increasing allocations to developed ex-US and select emerging markets incrementally to capture different growth drivers and reduce concentrated geopolitical and currency risk.
Market capitalization
- Mega-cap 41%
- Large-cap 34%
- Mid-cap 13%
- Small-cap 6%
- Micro-cap 5%
Observation: Market-cap distribution leans toward mega and large caps (75% combined) with modest mid small and micro exposure driven by the small cap value holding. Education: Larger caps typically offer more stability and liquidity while smaller caps can add return potential and diversification through different factor exposures such as value and higher growth sensitivity. Recommendation: Ensure small-cap exposure aligns with the investment horizon and risk tolerance; keep a plan for rebalancing small-cap gains and losses to capture potential premium without overexposing the portfolio to size-related volatility.
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: Optimization via the Efficient Frontier — a framework that identifies portfolios with the best expected return for a given level of risk — can be applied using only the current assets to find more efficient allocations within this fund set. Education: The Efficient Frontier is rooted in mean variance optimization which balances expected returns and volatility but is sensitive to input assumptions; “efficiency” means a better risk return trade-off not necessarily broader diversification or downside protection. Recommendation: Run constrained optimizations that respect concentration limits and use robust or resampled techniques to reduce sensitivity to estimation error before changing weights.
Dividends
- Avantis® U.S. Small Cap Value ETF 1.60%
- VanEck Semiconductor ETF 0.30%
- Vanguard S&P 500 ETF 1.10%
- Vanguard Total International Stock Index Fund ETF Shares 2.70%
- Weighted yield (per year) 1.15%
Observation: The blended portfolio yield is modest at about 1.15% with international holdings contributing relatively higher yield and sector mix lowering overall income. Education: Dividends provide steady cash returns and can cushion total return volatility; however growth-oriented allocations often accept lower yields in favor of capital appreciation. Recommendation: If income generation is a priority consider a separate allocation to higher-yielding assets or dividend-focused strategies while keeping the growth sleeve intact for compounding long-term capital appreciation.
Ongoing product costs
- Avantis® U.S. Small Cap Value ETF 0.25%
- VanEck Semiconductor ETF 0.35%
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.12%
Observation: The portfolio’s aggregate total expense ratio (TER) is low at 0.12% with the broad ETF offering rock-bottom fees and specialized or active exposures carrying higher but still reasonable fees. Education: TER is the annual cost of holding ETFs or funds and acts like a continual drag on returns similar to a toll on an investment road trip; small fee differences compound significantly over long horizons. Recommendation: Keep costs low where possible but weigh higher fees for specialized exposures against their expected incremental value and consider fee-efficient share classes or wrappers for tax efficiency.
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