Growth-Oriented Portfolio with Strong Diversification and Balanced Risk for Long-Term Investors

Report created on Nov 10, 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 is composed primarily of ETFs with a focus on U.S. large-cap growth stocks, small-cap value stocks, and international markets. This composition indicates a growth-oriented strategy with a substantial allocation to large-cap growth stocks, which are known for their potential for high returns. The inclusion of small-cap value and international ETFs adds diversification and exposure to different market segments. This blend of assets can offer a balanced approach, potentially capturing growth while managing risk through diversification.

Growth Info

Historically, the portfolio has shown a strong performance with a compound annual growth rate (CAGR) of 16.97%. This impressive return indicates that the portfolio has been successful in capturing the growth of its underlying assets. However, it has also experienced a significant maximum drawdown of -34.95%, highlighting the potential volatility associated with growth-focused investments. This performance suggests that while the portfolio can deliver substantial returns, it may also face considerable fluctuations, which is a common characteristic of growth-oriented strategies.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance shows a wide range of potential outcomes. This simulation, which uses random sampling to model possible future returns, suggests an annualized return of 15.82%. The 50th percentile projection indicates a potential growth of 405.34%, while the 5th percentile shows a more conservative 29.25% growth. These projections underscore the portfolio's potential for substantial growth, though there is also a possibility of lower returns, reflecting the inherent uncertainty in market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 99.07% of the total allocation, with minimal exposure to cash and other asset classes. This allocation aligns with a high-risk, high-reward strategy typical of growth-focused portfolios. The limited presence of cash and other assets suggests a commitment to maximizing equity returns, which can be advantageous in a rising market but may increase vulnerability during downturns. Investors should be aware of this concentration and consider the potential need for liquidity or risk management.

Sectors Info

  • Technology
    28%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    5%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation within the portfolio is diverse, with a significant emphasis on technology, financial services, and consumer cyclicals. Technology, making up 28.15% of the portfolio, reflects a strong belief in innovation and growth potential. Financial services and consumer cyclicals add balance, providing exposure to different economic cycles and consumer behavior. This sector diversity can help mitigate risks associated with any single industry, although the concentration in technology may expose the portfolio to sector-specific volatility.

Regions Info

  • North America
    66%
  • Asia Emerging
    11%
  • Europe Developed
    9%
  • Asia Developed
    5%
  • Japan
    4%
  • Africa/Middle East
    2%
  • Latin America
    2%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, which accounts for 66.44% of the allocation. This strong regional bias towards North America suggests confidence in the stability and growth prospects of the U.S. market. However, the inclusion of emerging markets and developed regions like Europe and Asia provides a degree of global diversification. This geographic spread can help capture growth opportunities in various markets, though it also introduces exposure to international market risks and currency fluctuations.

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-diversified and aligns with a growth strategy, so optimization should focus on maintaining this balance. To achieve a riskier or more conservative profile, investors can adjust their position along the efficient frontier. For a riskier approach, increasing exposure to high-growth sectors or regions may be considered. Conversely, to make the portfolio more conservative, investors could introduce more fixed-income assets or cash. Continuous assessment and alignment with personal risk tolerance and financial goals are key to optimization.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.48%

The portfolio offers a modest total dividend yield of 1.48%, with contributions from all included ETFs. The Vanguard FTSE Developed Markets Index Fund ETF Shares provides the highest yield at 3.0%, offering a steady income stream. While not the primary focus of a growth-oriented portfolio, dividends can provide a cushion during periods of market volatility. Investors should consider the role of dividends in their overall strategy, balancing the potential for capital appreciation with the benefits of income generation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

Portfolio costs are relatively low, with an overall Total Expense Ratio (TER) of 0.09%. This low cost structure is advantageous, as it allows more of the portfolio's returns to be retained by the investor. The Schwab U.S. Large-Cap Growth ETF, with an expense ratio of 0.04%, is particularly cost-effective. Keeping costs low is a crucial aspect of maximizing long-term returns, and this portfolio's expense management is commendable. Investors should continue to monitor costs to ensure they remain competitive and aligned with their investment objectives.

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