Balanced portfolio with a strong focus on US equities and notable tech sector exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor looking for growth with a moderate to high risk tolerance, comfortable with significant exposure to the US market, particularly the tech sector. It's ideal for those with a long-term investment horizon, who can withstand periods of volatility in pursuit of higher returns. The investor likely values the growth potential of equities over the stability of bonds or other asset classes and is interested in leveraging market trends within the technology sector.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    60.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    15.00%
  • Avantis® International Equity ETF
    AVDE - US0250727031
    10.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    3.00%
  • Avantis® Emerging Markets Equity ETF
    AVEM - US0250726041
    2.00%

The portfolio predominantly consists of ETFs, with a heavy allocation towards the Vanguard Total Stock Market Index Fund ETF Shares at 60%, indicating a strong bias towards US equities. The inclusion of Invesco NASDAQ 100 ETF further emphasizes this tilt, especially towards the technology sector. The diversification across international markets and small-cap value stocks, though present, is relatively minor in comparison. This setup suggests a strategy aiming for growth, leveraging the broad market and tech sector's potential, while attempting to mitigate risks through some level of international and small-cap exposure.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 15.55%, with a maximum drawdown of -25.76%. The days contributing most to returns are notably few, indicating that performance peaks are driven by specific market events. This performance, while impressive, underscores the portfolio's susceptibility to market volatility, particularly within its heavily weighted sectors and asset classes. Comparing this to a diversified benchmark might reveal opportunities to enhance risk-adjusted returns through better diversification.

Projection Info

The Monte Carlo simulation, running 1,000 scenarios, suggests a wide range of outcomes with a median projected growth of 635.6%. While the simulation shows a high likelihood of positive returns, it's important to remember that such projections are based on historical data and cannot guarantee future performance. They serve as a tool for understanding potential volatility and the spread of outcomes, rather than precise predictions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • Bonds
    0%
  • No data
    0%

The portfolio's allocation is entirely in stocks, with no presence in bonds, cash, or other asset classes. This singular focus on equities enhances growth potential but also increases vulnerability to market swings. Diversifying across different asset classes could provide a buffer against stock market volatility, potentially smoothing out returns over time without significantly compromising growth.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Telecommunications
    9%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

With technology constituting 29% of the portfolio, followed by financial services and consumer cyclicals, the sectoral distribution reflects a growth-oriented strategy. However, such concentration, especially in technology, can lead to heightened volatility. Diversifying more evenly across sectors could reduce risk without drastically diluting returns, especially considering the cyclic nature of sector performance.

Regions Info

  • North America
    85%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Australasia
    1%
  • Latin America
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

The geographic allocation heavily favors North America at 85%, with minimal exposure to other regions. This concentration enhances exposure to the US economy's growth potential but also increases susceptibility to region-specific risks. Increasing allocations to developed and emerging markets outside North America could offer broader exposure to global growth trends and reduce geopolitical and currency risks.

Market capitalization Info

  • Mega-cap
    37%
  • Large-cap
    27%
  • Mid-cap
    18%
  • Small-cap
    10%
  • Micro-cap
    6%

The portfolio's market cap distribution leans towards mega and big-cap stocks, which are typically less volatile than smaller companies but may offer lower growth potential. Including a greater proportion of small and micro-cap stocks could enhance growth prospects, albeit with increased risk. This strategy could be particularly effective for investors with a long-term horizon and higher risk tolerance.

Redundant positions Info

  • Avantis® International Small Cap Value ETF
    Avantis® International Equity ETF
    High correlation

The high correlation between the Avantis® International Small Cap Value ETF and the Avantis® International Equity ETF suggests redundancy, limiting the diversification benefits. Identifying and replacing overlapping assets with those offering distinct risk/return profiles could enhance portfolio efficiency, potentially reducing volatility without compromising expected returns.

Dividends Info

  • Avantis® International Equity ETF 2.70%
  • Avantis® International Small Cap Value ETF 3.50%
  • Avantis® Emerging Markets Equity ETF 2.80%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.39%

The portfolio's dividend yield averages at 1.39%, contributed variably by the different ETFs. While not the primary focus, dividends offer a source of passive income and can provide a cushion during market downturns. For investors seeking income or more conservative growth, rebalancing towards assets with higher dividend yields could be beneficial.

Ongoing product costs Info

  • Avantis® International Equity ETF 0.23%
  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Equity ETF 0.33%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.11%

With a total expense ratio (TER) averaging 0.11%, the portfolio is cost-efficient, enhancing net returns over the long term. This low-cost strategy is commendable, as it aligns with best practices for long-term investing. Keeping costs minimized is crucial for maximizing compounding growth potential, especially in a growth-oriented portfolio.

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.

The portfolio shows room for optimization, particularly in reducing asset overlap to improve diversification benefits. Utilizing the Efficient Frontier concept could help in adjusting allocations to achieve a more favorable risk-return profile. This involves re-evaluating the current asset mix and considering alternative allocations that could provide similar or higher returns for the same or lower level of risk.

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