A broadly diversified equity portfolio tilted to technology and growth with moderate added small value exposure

Report created on Aug 11, 2024

Risk profile Info

4/7
Balanced
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Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is almost entirely in stocks, with a simple four‑fund structure and a balanced core‑satellite feel. Two broad funds cover the total US and international markets, while a growth‑heavy fund and a small value fund act as tilts. For a “balanced” risk profile, being 99% in stocks is on the aggressive side compared with typical mixes that often include some bonds or cash for stability. This matters because stocks can swing sharply during market stress. If smoother ups and downs are important, adjusting the mix to include a steadier anchor could help. If the goal is long‑term growth and volatility is acceptable, the current stock‑heavy structure is very coherent.

Growth Info

Historically, this mix has compounded at about 15% per year (CAGR, or Compound Annual Growth Rate), meaning $10,000 could have grown to roughly $40,000 over 10 years if that rate persisted. The maximum drawdown near ‑26% shows the largest peak‑to‑trough drop, which is significant but not extreme for an all‑equity blend. Only 22 days made up 90% of returns, underlining how a handful of big up days drive long‑term results. This supports a steady buy‑and‑hold approach rather than market timing. Still, past returns like these are unusually strong by long‑term historical standards, so it’s important not to assume they’ll repeat in the same way.

Projection Info

The Monte Carlo analysis, which runs 1,000 random “what if” paths using historical patterns, shows a wide range of possible future outcomes. A 5th percentile end value around 122% suggests that in very poor scenarios the portfolio still ends slightly positive, while median and higher percentiles show very strong growth. The average simulated annual return above 17% is eye‑catching, but likely reflects a period when growth‑oriented assets did especially well. Monte Carlo uses the past as a guide, so if future conditions differ, outcomes could be weaker. For planning, it can be helpful to focus more on conservative percentiles and stress scenarios than on the most optimistic projections.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The allocation is 99% stocks and 1% cash, with no meaningful exposure to bonds or alternative assets. Being almost purely in equities maximizes long‑term growth potential but also maximizes exposure to stock market downturns. Compared to many “balanced” reference portfolios, which often hold 40–60% in bonds, this setup is closer to a growth or aggressive blend. The strong diversification score reflects that within equities, exposure is broad and well spread. If the aim is to reduce the size and emotional impact of big drawdowns, gradually introducing a stabilizing asset class could make the ride smoother. If the priority is growth and long horizon, the equity focus is well aligned.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Industrials
    10%
  • Telecommunications
    9%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector exposure is nicely spread across 10 sectors, with technology around 31% and healthy slices in financials, consumer sectors, industrials, and communications. This looks similar to many broad market benchmarks but with an extra lean toward tech and growth‑oriented areas via the NASDAQ 100 fund. Tech‑heavy portfolios tend to do very well when innovation and low interest rates are in favor, but can be more volatile when rates rise or sentiment swings against high‑growth names. The presence of more defensive sectors like utilities, consumer defensive, and healthcare gives some ballast, but they’re smaller weights. This sector mix is broadly diversified and modern, just a bit more growth‑tilted than the average.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic split is strongly tilted to North America at about 76%, with the rest spread across developed Europe and Asia and smaller slices of emerging regions. This is pretty similar to global market weights, where US companies dominate major indexes. Heavy US exposure has been a tailwind over the last decade, as US markets outperformed many others. However, that also means results are quite tied to the fortunes of the US economy and its largest companies. The presence of international holdings is a big positive, since different regions can lead at different times. If a more evenly global stance is desired, modestly increasing non‑US exposure over time could reduce home‑country concentration.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    28%
  • Mid-cap
    15%
  • Small-cap
    8%
  • Micro-cap
    6%

The portfolio spans the full market‑cap spectrum: 41% mega caps, 28% big, 15% mid, 8% small, and 6% micro. That’s impressively broad and aligns well with diversified equity best practices. The explicit small‑cap value fund boosts exposure to smaller, cheaper companies, which historically have sometimes outperformed over very long periods, though with bumpier rides. Large and mega caps bring stability and liquidity, while small and micro caps add return potential and diversification of business types. This blend is well‑balanced and fits nicely with global norms, just with a slight extra emphasis on the small end. That tilt can be powerful over decades but may underperform for multi‑year stretches, so some patience is needed.

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.

Given the current four‑fund lineup, this portfolio looks like it sits near a sensible point on the Efficient Frontier. The Efficient Frontier is just the mix of these existing holdings that offers the best trade‑off between risk (volatility) and return. Right now, the all‑equity stance targets higher returns with higher swings; introducing a steadier asset could move it toward a more “efficient” balance for a balanced profile. Within the current funds, small shifts between the broad market core and the heavier‑risk tilts could slightly fine‑tune volatility without changing the character. Efficiency here is about the best possible risk‑return ratio with these ingredients, not necessarily about maximizing diversification for its own sake.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.43%

The overall dividend yield around 1.43% is modest, which is typical for growth‑tilted, broad equity portfolios today. The international fund and small value fund provide higher yields, while the growth‑heavy NASDAQ exposure is lower. Dividends can be helpful for those who like a small, steady cash flow or who reinvest them to buy more shares over time. Still, for this kind of portfolio, most of the return is expected to come from price growth rather than income. This fits an accumulation‑oriented approach focused on building wealth instead of generating current spending money. If future income needs grow, gradually shifting toward higher‑yielding holdings could be considered later.

Ongoing product costs Info

  • 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%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.08%

The total expense ratio near 0.08% is impressively low and a major strength. Costs act like friction on returns: the lower they are, the more of the portfolio’s growth stays in your pocket. Using low‑cost index funds as the core is very aligned with best practices and benchmark standards. Even the more specialized funds are reasonably priced for their roles. Over decades, the difference between 0.08% and, say, 1% in fees can mean many thousands of dollars of extra value. From a cost perspective, this setup is excellent and already optimized, so the main focus can stay on allocation, risk, and behavior rather than fee reduction.

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