A growth-focused portfolio with strong global diversification and moderate risk exposure

Report created on Dec 29, 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 primarily composed of ETFs, with a dominant allocation to the Vanguard Total World Stock Index Fund ETF Shares at 60%. This fund provides broad exposure to global equities. The Avantis International and U.S. Small Cap Value ETFs each hold 20%, focusing on small-cap value stocks in their respective regions. This composition leans heavily towards equities, typical for a growth-oriented portfolio. Compared to common benchmarks, the portfolio is well-diversified across global markets, but it may benefit from a slight increase in bond allocation to cushion against volatility.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 13.47%, indicating strong growth over time. However, it experienced a maximum drawdown of -38.52%, reflecting significant potential volatility. This performance aligns well with a growth-focused strategy, though it may not suit investors with low risk tolerance. Compared to benchmarks, the portfolio's growth is commendable, but the drawdown suggests a need for caution during market downturns. It's important to remember that past performance doesn't guarantee future results, so maintaining diversification and risk management is key.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a promising annualized return of 14.82%. With 964 out of 1,000 simulations showing positive returns, the portfolio appears well-positioned for growth. Key percentiles indicate potential end values, with a 5th percentile return of 17.13% and a 67th percentile return of 568.12%. While these projections are encouraging, they rely on historical data, which cannot predict future market conditions. Investors should use this as a guide rather than a guarantee, ensuring their portfolio remains adaptable to changing circumstances.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of total assets. This allocation is typical for a growth-focused strategy, aiming for higher returns through equity exposure. However, this concentration in a single asset class increases risk, particularly in volatile markets. Introducing a modest allocation to bonds or other asset classes could enhance diversification and reduce risk. Compared to benchmark norms, the portfolio's asset class distribution is aggressive, which may suit investors with a higher risk tolerance but could benefit from additional balance for long-term stability.

Sectors Info

  • Financials
    19%
  • Technology
    17%
  • Industrials
    15%
  • Consumer Discretionary
    13%
  • Basic Materials
    7%
  • Health Care
    7%
  • Energy
    7%
  • Consumer Staples
    5%
  • Telecommunications
    5%
  • Real Estate
    2%
  • Utilities
    2%

The sectoral allocation is well-diversified, with significant investments in financial services, technology, and industrials. This diversification aligns with common benchmarks, providing exposure to various economic drivers. However, a notable concentration in financial and technology sectors may lead to increased volatility, especially during economic shifts or interest rate changes. Balancing sector weights could mitigate these risks. The portfolio's sector composition is generally robust, supporting growth potential while maintaining diversification. Continuous monitoring of sector trends and adjusting allocations as needed will help manage sector-specific risks.

Regions Info

  • North America
    61%
  • Europe Developed
    17%
  • Japan
    10%
  • Asia Emerging
    4%
  • Australasia
    3%
  • Asia Developed
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%

Geographically, the portfolio is well-diversified, with significant exposure to North America, Europe, and Japan. This distribution aligns with global benchmarks, providing a balanced mix of developed and emerging markets. However, the relatively low allocation to emerging markets may limit growth potential in rapidly developing regions. Increasing exposure to these areas could enhance diversification and capture opportunities in high-growth economies. The current geographic allocation supports a stable, globally diversified portfolio, but regular assessment of regional performance and risks will ensure alignment with investment goals.

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 offers opportunities for optimization using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. By adjusting allocations among existing ETFs, the portfolio can potentially achieve improved returns for a given level of risk. This optimization focuses on the current asset mix, not introducing new investments. While efficiency enhances performance, it's important to balance it with diversification and individual goals. Regularly revisiting the portfolio's risk-return profile ensures it remains aligned with the investor's objectives and market conditions.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Weighted yield (per year) 2.32%

The portfolio's dividend yield stands at 2.32%, with contributions from all ETFs. This yield provides a steady income stream, complementing capital gains for total returns. The Avantis International Small Cap Value ETF offers the highest yield at 4.3%, enhancing income potential. While dividends are a valuable component of returns, the portfolio's growth focus means capital appreciation remains the primary driver. Investors seeking income should maintain a balance between yield and growth, ensuring the portfolio aligns with their financial goals and risk tolerance.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is impressively low and supports better long-term performance by minimizing costs. Each ETF's expense ratio is competitive, with the Vanguard Total World Stock Index Fund ETF Shares at a remarkable 0.07%. Low costs are a significant advantage, as they preserve more of the portfolio's returns over time. Regularly reviewing and managing expenses ensures the portfolio remains cost-efficient, maximizing the potential for growth. This cost structure aligns well with best practices, contributing to the portfolio's overall effectiveness.

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