A highly diversified growth-focused portfolio with a balanced global exposure

Report created on Mar 19, 2025

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 10 different ETFs, with a focus on U.S. and international small-cap value stocks, large companies in emerging markets, and hedged European equities. The portfolio leans heavily on equities, making up 77% of the total allocation. It also includes bonds, commodities, and cash, rounding out the diversification. This structure aligns well with a growth-oriented strategy due to the significant equity exposure. However, the allocation differs from a typical benchmark by having a higher emphasis on small-cap and value stocks, which could lead to higher volatility but also potential for greater returns.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 14.97%, which is impressive for a growth-focused strategy. However, it has also experienced a maximum drawdown of -39.55%, indicating substantial volatility. The portfolio's performance outpaces many benchmarks, suggesting effective asset selection. While past performance is not a guarantee of future results, the historical returns provide a strong foundation for confidence. Investors should be prepared for potential downturns and consider their ability to withstand such volatility in pursuit of long-term growth.

Projection Info

Using Monte Carlo simulations, which assess potential future outcomes based on historical data, the portfolio shows a wide range of possibilities. With a median expectation of 320.6% growth, this suggests substantial upside over the long term. However, the simulations also highlight a 5th percentile outcome of -25.0%, underscoring the inherent risks. While Monte Carlo projections offer valuable insights, they are not foolproof and should be viewed as one of many tools in decision-making. Investors should weigh these projections against their risk tolerance and investment horizons.

Asset classes Info

  • Stocks
    77%
  • Bonds
    10%
  • Other
    7%
  • Cash
    7%

The portfolio's asset class allocation includes 77% stocks, 10% bonds, 7% other assets, and 7% cash. This composition emphasizes growth through equity investments while maintaining a buffer with bonds and cash. Compared to typical benchmarks, the portfolio's equity weight is higher, indicating a more aggressive stance. The inclusion of bonds and cash provides some stability, but the overall risk remains high due to the heavy equity focus. Investors might consider adjusting the balance if they seek more stability or are nearing their investment goals.

Sectors Info

  • Financials
    17%
  • Industrials
    12%
  • Technology
    11%
  • Consumer Discretionary
    9%
  • Basic Materials
    6%
  • Consumer Staples
    6%
  • Energy
    6%
  • Health Care
    5%
  • Telecommunications
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is well-diversified, with financial services, industrials, and technology leading the way. The portfolio's sector composition aligns closely with common benchmarks, providing broad exposure across industries. Notably, a tech-heavy allocation can lead to higher volatility, especially during interest rate hikes. This balance is beneficial for spreading risk across various economic cycles. However, investors should monitor sector trends and be ready to adjust allocations if certain industries become overvalued or face headwinds.

Regions Info

  • North America
    41%
  • Europe Developed
    24%
  • Asia Emerging
    6%
  • Japan
    3%
  • Asia
    2%
  • Latin America
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%

The portfolio's geographic allocation is diverse, with 41% in North America, 24% in Europe Developed, and smaller allocations across emerging markets and other regions. This global exposure enhances diversification and reduces reliance on any single economy. Compared to benchmarks, the portfolio has a notable tilt towards Europe, which may offer opportunities but also comes with risks tied to regional economic conditions. Investors should consider whether this geographic balance aligns with their views on global growth prospects and any specific regional risks they wish to mitigate.

Market capitalization Info

  • Mega-cap
    21%
  • Large-cap
    16%
  • Mid-cap
    16%
  • Small-cap
    12%
  • Micro-cap
    8%

The portfolio features a balanced market capitalization exposure, with 21% in mega-caps, 16% in both big and medium caps, and 12% in small caps. This distribution supports diversification across company sizes, allowing for potential growth from smaller companies and stability from larger ones. Compared to benchmarks, the portfolio leans slightly towards smaller companies, which can offer higher growth potential but also increased volatility. Investors should assess whether this balance fits their risk tolerance and growth expectations.

Redundant positions Info

  • WisdomTree Europe Hedged Equity Fund
    Xtrackers MSCI Europe Hedged Equity ETF
    High correlation

Asset correlation within the portfolio shows that some ETFs, like the WisdomTree Europe Hedged Equity Fund and Xtrackers MSCI Europe Hedged Equity ETF, are highly correlated. This means they tend to move together, which may limit diversification benefits during market downturns. Reducing overlap in highly correlated assets can enhance diversification and improve risk management. Investors should evaluate whether these correlations align with their diversification goals and consider adjustments to minimize redundant exposures.

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 using the Efficient Frontier, which aims to find the best possible risk-return ratio given the current assets. This involves adjusting allocations among existing assets to achieve a more efficient balance. While the portfolio is already well-diversified, exploring optimization can provide insights into potential improvements. Investors should consider whether they want to pursue maximum efficiency or maintain current allocations based on other priorities like income or specific sector exposures.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.90%
  • Avantis® U.S. Small Cap Value ETF 1.80%
  • Xtrackers MSCI Europe Hedged Equity ETF 0.10%
  • Schwab Fundamental Emerging Markets Large Company Index ETF 4.40%
  • WisdomTree Europe Hedged Equity Fund 2.90%
  • Invesco S&P 500® Low Volatility ETF 1.00%
  • ProShares UltraPro S&P500 0.80%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 1.88%

The portfolio's total dividend yield is 1.88%, with notable contributions from the Schwab Fundamental Emerging Markets Large Company Index ETF and Avantis® International Small Cap Value ETF. While not the primary focus of a growth-oriented portfolio, dividends provide a steady income stream and can enhance total returns over time. The yield is modest, reflecting the growth focus, but it still offers some income stability. Investors seeking higher income might consider reallocating towards higher-yielding assets, while those prioritizing growth may maintain the current balance.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • abrdn Bloomberg All Commodity Strategy K-1 Free ETF 0.26%
  • Xtrackers MSCI Europe Hedged Equity ETF 0.46%
  • Schwab Fundamental Emerging Markets Large Company Index ETF 0.39%
  • SPDR Gold MiniShares 0.10%
  • WisdomTree Europe Hedged Equity Fund 0.58%
  • Invesco S&P 500® Low Volatility ETF 0.25%
  • ProShares UltraPro S&P500 0.92%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.40%

The portfolio's total expense ratio (TER) is 0.40%, which is reasonable for a diversified ETF portfolio. The costs are impressively low, supporting better long-term performance by minimizing the drag on returns. However, the ProShares UltraPro S&P500 ETF has a notably higher expense ratio, which could impact net returns. Investors should regularly review and compare costs to ensure they are getting the best value for their investment. Reducing expenses where possible can significantly enhance long-term growth, especially in a growth-focused portfolio.

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