A growth-focused portfolio with diverse ETFs including cryptocurrency exposure

Report created on Jul 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of four ETFs, each holding a 30% allocation, except for the ProShares Bitcoin Strategy ETF at 10%. This structure reflects a strong commitment to diversification across asset classes and investment themes. Such a balanced allocation helps mitigate risks associated with individual securities. Comparing to a typical benchmark, this portfolio's composition is notably diversified, with a significant portion allocated to small-cap and international stocks, enhancing its growth potential. To further optimize this balance, consider periodically reviewing the allocations to ensure they align with your evolving investment goals and risk tolerance.

Growth Info

Historically, the portfolio's CAGR of 8.00% signifies respectable growth, although the maximum drawdown of -31.76% highlights its exposure to volatility. By comparison, the S&P 500 has historically returned around 10% annually, indicating this portfolio's performance is slightly below average for a growth-oriented strategy. Understanding this context is crucial for setting realistic expectations. To improve resilience against downturns, consider strategies like increasing allocations to more stable assets or incorporating tactical asset allocation to adjust exposure based on market conditions.

Projection Info

The Monte Carlo simulation, with 1,000 runs, suggests a median return of 88.8%, with a wide range of outcomes. This approach uses historical data to estimate future performance but isn't foolproof, as past performance may not predict future results. The simulation's results indicate a potential for high returns, but also a risk of significant losses. To manage these risks, consider maintaining a diversified portfolio and periodically reassessing your risk tolerance and investment objectives, especially if market conditions change or your financial situation evolves.

Asset classes Info

  • Stocks
    89%
  • Cash
    7%
  • Other
    4%

The portfolio's allocation across asset classes includes 89% in stocks, 7% in cash, and 4% in other assets. This high stock allocation aligns with a growth-focused strategy, aiming for capital appreciation. Compared to a typical balanced portfolio, this is more aggressive, suitable for investors comfortable with higher volatility. To enhance diversification, consider incorporating other asset classes like bonds or real estate, which can provide stability and income during market downturns, potentially smoothing out returns over time.

Sectors Info

  • Technology
    18%
  • Financials
    16%
  • Industrials
    12%
  • Health Care
    11%
  • Consumer Discretionary
    9%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    4%
  • Utilities
    3%

Sector allocation is diverse, with significant exposure to technology (18%), financial services (16%), and industrials (12%). This mirrors common growth benchmarks, which often emphasize these sectors. Such a composition can capitalize on economic growth but may also lead to higher volatility. For instance, tech-heavy portfolios can be sensitive to interest rate changes. To manage sector-specific risks, consider periodically reviewing sector allocations and rebalancing to maintain desired exposure, ensuring alignment with broader economic trends and personal investment goals.

Regions Info

  • North America
    62%
  • Europe Developed
    11%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (62%), with moderate exposure to Europe and Asia. This allocation reflects a common bias towards developed markets, which can offer stability and growth. However, it limits potential benefits from emerging markets' growth. To enhance global diversification, consider increasing exposure to underrepresented regions like Latin America or Africa, which may offer higher growth potential albeit with increased risk. This approach could provide a hedge against regional economic downturns and currency fluctuations.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    20%
  • Small-cap
    17%
  • Micro-cap
    13%
  • Mid-cap
    12%

The portfolio is diversified across market capitalizations, with exposure to mega (27%), big (20%), and small caps (17%). This mix balances growth potential and risk, as small caps often offer higher growth but increased volatility compared to mega caps. Such diversification can help capture opportunities across different market segments. To optimize this balance, consider adjusting allocations based on market conditions and your risk tolerance, ensuring you're well-positioned to benefit from shifts in market dynamics while managing potential risks.

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 can be optimized using the Efficient Frontier, which seeks the best risk-return ratio. By adjusting the current asset allocation, you might achieve a more efficient portfolio, maximizing returns for a given level of risk. This involves reallocating assets to enhance diversification and minimize unnecessary risks. However, optimization should align with your investment goals and risk tolerance, ensuring you're comfortable with potential outcomes. Regularly revisiting this strategy can help maintain an optimal balance as market conditions and personal circumstances change.

Dividends Info

  • ProShares Bitcoin Strategy ETF 66.00%
  • iShares Russell 2000 ETF 1.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 8.25%

The portfolio's overall dividend yield is 8.25%, significantly influenced by the ProShares Bitcoin Strategy ETF's high yield. Dividends can provide a steady income stream, which is beneficial for reinvestment or income needs. However, the sustainability of such high yields, especially from non-traditional assets, is uncertain. To ensure a reliable income stream, consider diversifying dividend sources and focusing on stable, dividend-paying stocks. This approach can help balance growth and income, aligning with a long-term investment strategy.

Ongoing product costs Info

  • ProShares Bitcoin Strategy ETF 0.95%
  • iShares Russell 2000 ETF 0.19%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low, supporting better long-term performance by minimizing costs. Such efficiency is crucial for compounding returns over time. High costs can erode returns, especially in a growth-focused portfolio. To maintain cost-effectiveness, periodically review fund fees and consider switching to lower-cost alternatives if available. Staying informed about expense ratios and seeking cost-efficient investments can enhance your portfolio's overall return potential without compromising on diversification or quality.

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