A Growth-Oriented Portfolio with High Risk and Diversification Suitable 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 heavily weighted towards U.S. equities, with Schwab U.S. Large-Cap Growth ETF making up 45% and Avantis® U.S. Small Cap Value ETF comprising 25%. This indicates a strong focus on U.S. market growth potential. Additionally, the portfolio includes Vanguard FTSE Developed Markets and Emerging Markets ETFs, each at 15%, providing international exposure. This composition suggests a broadly diversified approach, aiming for growth by leveraging both domestic and international markets. To enhance diversification, consider adding different asset classes like bonds or real estate investment trusts to balance potential risks.

Growth Info

The historical performance of this portfolio is impressive, with a compound annual growth rate (CAGR) of 17.46%. However, it experienced a significant maximum drawdown of -35.58%, indicating vulnerability during market downturns. This performance suggests a high-risk, high-reward strategy. While the returns are attractive, it's essential to be prepared for potential volatility. To mitigate this, consider implementing strategies to protect against downside risk, such as diversifying into less volatile assets or employing hedging techniques.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, reveals potential future outcomes. With 1,000 simulations, the 5th percentile projects a 16.75% return, while the 50th and 67th percentiles project 427.61% and 717.82%, respectively. The annualized return across all simulations is 15.54%. This suggests a high likelihood of positive returns but with varying degrees of success. Monte Carlo simulations highlight the uncertainty and variability of future returns. Consider maintaining a diversified portfolio to manage risk and increase the likelihood of achieving favorable outcomes.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly invested in stocks, accounting for 99.19% of the allocation. This indicates a strong focus on equities, which are generally associated with higher risk and potential returns. While this aligns with a growth-oriented strategy, the lack of diversification across asset classes may increase vulnerability to market fluctuations. To reduce risk, consider incorporating other asset classes like bonds, which can provide stability and income, or alternative investments to enhance diversification.

Sectors Info

  • Technology
    28%
  • Financials
    17%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    6%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is diverse, with a significant emphasis on technology (27.73%), financial services (16.84%), and consumer cyclicals (13.02%). This indicates a growth-focused strategy, capitalizing on sectors with high potential for capital appreciation. However, this concentration may increase exposure to sector-specific risks. To optimize sector allocation, consider periodically reviewing and rebalancing the portfolio to align with changing market conditions and reduce overexposure to any single sector.

Regions Info

  • North America
    71%
  • Asia Emerging
    9%
  • Europe Developed
    8%
  • Asia Developed
    4%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (71.06%), with additional exposure to Asia Emerging (9.13%) and Europe Developed (8.15%). This indicates a strong focus on the U.S. market while maintaining some international diversification. While this provides access to global growth opportunities, the heavy reliance on North America may limit exposure to other high-growth regions. To enhance geographical diversification, consider increasing allocation to underrepresented regions to capture global market trends.

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's optimization chart highlights potential areas for improvement. To achieve a riskier portfolio, consider increasing exposure to growth-oriented assets while maintaining diversification. Conversely, for a more conservative approach, allocate more to stable, income-generating assets like bonds. The efficient frontier can guide these adjustments, balancing risk and return. Before optimizing, ensure the portfolio aligns with financial goals and risk tolerance. Focus on maintaining diversification and cost efficiency to enhance overall performance.

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) 1.41%

The portfolio's dividend yield is 1.41%, with contributions from Avantis® U.S. Small Cap Value ETF (1.5%), Schwab U.S. Large-Cap Growth ETF (0.4%), Vanguard FTSE Developed Markets ETF (3.0%), and Vanguard FTSE Emerging Markets ETF (2.7%). This yield provides a modest income stream, supplementing capital appreciation. While the focus is on growth, dividends can enhance total returns and provide a buffer during market volatility. Consider reinvesting dividends to compound growth or allocate to high-dividend-paying assets for increased income.

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) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, reflecting low investment costs. This efficient cost structure enhances net returns, allowing more capital to compound over time. Low costs are crucial for long-term investment success, as they minimize the drag on performance. To maintain cost efficiency, regularly review and compare expense ratios across similar investment options. Consider transitioning to lower-cost alternatives if necessary, ensuring that fees remain competitive.

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