A growth-focused portfolio with a strong domestic bias and moderate international diversification

Report created on Feb 3, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a significant 76% allocation to the Vanguard S&P 500 ETF. This indicates a strong focus on large-cap U.S. equities. The Vanguard Total International Stock Index Fund ETF Shares represents 19%, adding international diversification, while the Avantis® U.S. Small Cap Value ETF comprises 5%, providing exposure to smaller, potentially higher-growth U.S. companies. This composition aligns with a growth-oriented strategy, though it may benefit from further diversification across asset classes and regions to enhance risk management.

Growth Info

Historically, the portfolio has shown robust performance, with a Compound Annual Growth Rate (CAGR) of 15.35%. This impressive growth reflects the strong performance of U.S. equities, particularly in recent years. However, the maximum drawdown of -34.43% highlights the potential volatility. Comparing to benchmarks, this performance aligns well with typical large-cap U.S. equity indices. Investors should be aware that past performance doesn't guarantee future results, and diversification could help mitigate future downturns.

Projection Info

Using Monte Carlo simulations, the portfolio's potential future outcomes were projected. With 1,000 simulations, the results show a wide range of possible returns, with a median (50th percentile) growth of 447.3%. The 5th percentile indicates a much lower return of 29.4%, highlighting the uncertainty inherent in investing. While 974 simulations resulted in positive returns, it's crucial to remember that these projections are based on historical data and assumptions, which may not account for future market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99% in equities and only 1% in cash. This allocation reflects a strong growth orientation, as equities typically offer higher potential returns compared to other asset classes like bonds or real estate. However, such a high equity concentration may increase volatility and risk, especially during market downturns. To improve diversification, consider incorporating other asset classes, which can provide stability and reduce overall portfolio risk.

Sectors Info

  • Technology
    28%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily concentrated in technology at 28%, followed by financial services and consumer cyclicals. This mirrors common benchmarks but may expose the portfolio to sector-specific risks, such as regulatory changes in tech or economic cycles affecting consumer spending. While this allocation can drive growth during tech booms, it may also lead to increased volatility. Balancing sector exposure can help mitigate risks and provide more stable returns across different market conditions.

Regions Info

  • North America
    82%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 82% exposure. This domestic bias aligns with the U.S.-centric nature of the Vanguard S&P 500 ETF. While this has been beneficial given the strong performance of U.S. markets, it limits exposure to potentially faster-growing regions. Increasing allocations to international markets, particularly emerging markets, could enhance diversification and capture growth opportunities outside the U.S., reducing reliance on a single region.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    17%
  • Small-cap
    4%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is skewed towards mega and big caps, comprising 76% combined. This focus on larger companies can offer stability and lower volatility compared to smaller firms. However, the limited allocation to small and micro caps at 6% may restrict potential high-growth opportunities. Balancing the market cap exposure by increasing small-cap investments could enhance growth prospects, though it may also increase 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.

The portfolio could potentially be optimized along the Efficient Frontier, which represents the set of portfolios offering the highest expected return for a given level of risk. Adjusting the allocation among current assets could improve the risk-return ratio, enhancing efficiency. However, this optimization should align with the investor's risk tolerance and goals. While efficiency focuses on risk and return, it may not account for other factors like income needs or ethical considerations.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.60%

The portfolio's overall dividend yield is 1.60%, with the Vanguard Total International Stock Index Fund contributing the highest yield of 3.20%. Dividends can provide a steady income stream, which is particularly beneficial in volatile markets. However, given the growth focus, the portfolio prioritizes capital appreciation over dividend income. Investors seeking income may consider increasing allocations to higher-yielding assets, but should balance this with growth objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, primarily due to the Vanguard S&P 500 ETF's minimal costs. Low fees are a significant advantage, as they enhance long-term returns by reducing the drag on performance. This cost efficiency aligns well with best practices in portfolio management. Investors should continue to monitor and manage costs, ensuring that they remain low, as this contributes positively to overall portfolio performance and growth.

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