Balanced Growth Portfolio with High Risk and Broad Diversification Suitable for Experienced Investors

Report created on Nov 29, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs with a strong focus on stocks, making up nearly 99% of the asset allocation. It includes Vanguard Total Stock Market Index Fund, Avantis U.S. Small Cap Value ETF, Vanguard Total International Stock Index Fund, and Amplify Transformational Data Sharing ETF. The high concentration in equities suggests a growth-oriented strategy. This is relevant for those seeking capital appreciation over the long term. To improve, consider maintaining a balance between growth and stability, potentially introducing more fixed-income securities to manage risk.

Growth Info

Historically, the portfolio has delivered a commendable compound annual growth rate (CAGR) of 16.68%, indicating strong performance. However, it experienced a maximum drawdown of -37.03%, highlighting significant volatility. This performance suggests that while the portfolio can generate impressive returns, it can also face substantial losses in turbulent markets. To enhance resilience, consider diversifying further across asset classes to mitigate potential drawdowns while maintaining growth potential.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, provides insights into the portfolio's future potential. With 1,000 simulations, the median (50th percentile) scenario suggests a 657.33% return, while the 5th percentile projects a 22.35% return. This analysis demonstrates the portfolio's capacity for significant growth, but also the inherent risk. To optimize future outcomes, regularly review and adjust the portfolio's risk exposure as market conditions evolve, ensuring alignment with financial goals.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily weighted in stocks, with negligible allocations in cash and other assets. This concentration in equities can lead to higher returns but also increases risk exposure. Such an allocation is suitable for investors with a higher risk tolerance and a long-term investment horizon. To improve risk management, consider incorporating a mix of bonds or alternative assets, which can provide stability and income, balancing the high volatility associated with equities.

Sectors Info

  • Technology
    23%
  • Financials
    19%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    6%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is diverse, with notable investments in technology, financial services, and industrials. This spread across various sectors reduces sector-specific risks and enhances the potential for capturing growth opportunities across the market. Technology leads the pack, reflecting a focus on innovation and future growth. To further optimize, ensure that sector allocations align with your risk tolerance and market outlook, periodically rebalancing to capture emerging trends and mitigate sector-specific downturns.

Regions Info

  • North America
    84%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

The geographic composition is predominantly North American, with some exposure to Europe and Asia. This bias towards North America aligns with the home-country advantage, benefiting from familiar economic conditions and regulatory environments. However, this concentration might limit gains from global diversification. To enhance geographic balance, consider increasing exposure to emerging markets, which can offer growth potential and diversification benefits, reducing reliance on any single region's economic performance.

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 optimization chart indicates potential areas for improvement, focusing on risk-return balance. Moving along the efficient frontier, one can adjust the portfolio to be riskier or more conservative. To achieve a riskier profile, increase exposure to high-growth assets. For a more conservative approach, consider enhancing fixed-income allocations. Prioritize aligning the portfolio with financial objectives, ensuring that risk levels are appropriate for the investor's comfort and long-term goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Amplify Transformational Data Sharing ETF 0.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.60%

The portfolio offers a modest total yield of 1.6%, with the highest yield from the Vanguard Total International Stock Index Fund at 3.0%. This dividend yield provides some income, but the focus remains on capital appreciation. For those seeking higher income, consider increasing allocations to dividend-paying stocks or funds. Balancing growth and income can provide a more stable return profile, particularly for investors nearing retirement or seeking regular cash flow.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Amplify Transformational Data Sharing ETF 0.76%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is a low 0.11%, reflecting cost-effective management. This low cost is advantageous, as it minimizes the drag on returns, allowing more of the portfolio's growth to benefit the investor. Keeping costs low is essential for long-term investment success. To maintain this advantage, continue to monitor and manage expenses, ensuring that any new investments or changes to the portfolio do not significantly increase the overall cost.

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