Growth-Focused Portfolio with Strong Diversification and Moderate Risk for Long-Term Investors

Report created on Dec 6, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of four ETFs, primarily focusing on equities. It's heavily weighted towards the Vanguard S&P 500 ETF, which makes up half of the portfolio. This allocation indicates a strong emphasis on large-cap U.S. stocks. The remaining investments include developed and emerging markets, as well as U.S. small-cap value stocks. This mix offers broad diversification across different regions and market segments, providing a good balance between growth potential and risk management. Ensuring a diversified approach helps in mitigating risks associated with any single market or sector.

Growth Info

Historically, this portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 14.18%. This indicates a strong growth trajectory, but it's important to note the maximum drawdown of -35.13%, reflecting potential volatility. The fact that 90% of returns were achieved in just 14 days highlights the importance of staying invested during market fluctuations. While past performance is not indicative of future results, this historical data suggests that the portfolio has navigated market ups and downs effectively, aligning well with a growth-oriented investment strategy.

Projection Info

A Monte Carlo simulation, with 1,000 iterations, projects potential future outcomes for the portfolio. Assuming a hypothetical initial investment, the simulation shows a median return of 389.18%, with 956 simulations yielding positive returns. This suggests a high likelihood of achieving favorable outcomes over the investment horizon. The 5th percentile return of 4.6% indicates the potential downside risk, while the 67th percentile return of 631.96% highlights the upside potential. Monte Carlo simulations help in understanding the range of possible outcomes, aiding in aligning expectations with investment goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly composed of stocks, accounting for over 99% of the asset allocation. This heavy allocation towards equities suggests a focus on capital appreciation and long-term growth. While this can lead to higher returns, it also introduces more volatility compared to a more balanced allocation that includes bonds or other fixed-income assets. Investors should be comfortable with the potential for significant fluctuations in portfolio value. To manage risk, consider periodically reviewing the asset allocation to ensure it aligns with changing financial goals and risk tolerance.

Sectors Info

  • Technology
    22%
  • Financials
    18%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    5%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation within the portfolio covers a broad range of industries, with technology, financial services, and industrials being the most prominent. This diversified sector exposure helps in reducing the impact of sector-specific downturns. However, the significant weighting in technology may lead to increased volatility, given the sector's historical fluctuations. It's important to maintain an awareness of sector performance and economic trends. Regularly reviewing sector allocations can help in making informed decisions to adjust the portfolio, if necessary, to maintain a balanced risk-reward profile.

Regions Info

  • North America
    63%
  • Europe Developed
    16%
  • Japan
    6%
  • Asia Emerging
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily concentrated in North America, particularly the U.S., which accounts for over 62% of the allocation. This focus on U.S. markets could benefit from the stability and growth of the American economy. However, it also exposes the portfolio to risks associated with regional economic downturns. The inclusion of developed and emerging markets adds diversification, potentially enhancing returns and reducing risk. It's important to monitor global economic conditions and consider adjusting geographic allocations to ensure a balanced exposure to various regions.

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 is well-optimized for growth, but there's room for adjustments along the efficient frontier. By moving towards a riskier portfolio, one could increase exposure to higher volatility assets, potentially boosting returns. Conversely, shifting towards a more conservative allocation could involve incorporating fixed-income assets to reduce volatility. It's essential to balance risk and reward according to personal financial goals. Before making changes, focus on understanding the current risk-return profile and ensure that any adjustments align with long-term objectives and risk tolerance. Regularly reviewing the portfolio can help in maintaining optimal performance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 1.91%

The portfolio offers a moderate dividend yield of 1.91%, providing a steady income stream alongside capital appreciation. This yield is primarily driven by the Vanguard FTSE Developed Markets Index Fund ETF Shares, which has a yield of 3.0%. Dividends can help cushion the impact of market volatility and provide a source of passive income. Reinvesting dividends can also contribute to compounding returns over time. Regularly reviewing dividend yields and distributions can ensure that the portfolio continues to meet income objectives, especially for investors seeking both growth and income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is relatively low at 0.06%, indicating cost efficiency. Low costs are crucial for maximizing net returns over time. The Vanguard S&P 500 ETF has the lowest expense ratio, contributing to the overall cost-effectiveness. Keeping investment costs low helps in enhancing returns, especially in the long run. It's important to regularly review expense ratios and consider cost-effective alternatives if necessary. Staying mindful of fees ensures that more of the portfolio's returns are retained, supporting overall financial goals.

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