Growth-focused portfolio with strong U.S. bias and moderate sector diversification

Report created on Jan 30, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is dominated by U.S. equities with a heavy focus on large-cap stocks, mainly through a 60% allocation to the Vanguard S&P 500 ETF. It also includes U.S. small-cap and mid-cap exposure through Avantis® and Invesco ETFs, respectively. The remaining 10% is allocated to international stocks via a Vanguard ETF. Compared to a typical growth portfolio, this one is heavily skewed towards U.S. markets, which can limit exposure to global growth opportunities. Consider whether this U.S.-centric focus aligns with your long-term goals, and if not, explore increasing international exposure for better diversification.

Growth Info

Historically, this portfolio has shown impressive growth with a Compound Annual Growth Rate (CAGR) of 16.55%. However, it experienced a significant max drawdown of -36.08%, indicating vulnerability during market downturns. This performance aligns with growth-focused portfolios, which often exhibit higher volatility. While past performance is not a guarantee of future results, understanding these trends can help manage expectations. To mitigate potential future drawdowns, consider incorporating more defensive assets or diversifying across different asset classes.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes using historical data to model different scenarios. This portfolio's simulations show promising results, with a median return of 527.3% and 981 out of 1,000 simulations yielding positive returns. However, it's important to note that simulations are not predictions and are limited by historical data. To ensure a balanced approach, consider regularly reviewing asset allocations to adapt to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can offer high growth potential but also increased volatility. A well-diversified portfolio typically includes multiple asset classes, such as bonds or real estate, to balance risk and return. While this 100% equity allocation aligns with a growth-focused strategy, consider whether this level of risk suits your financial situation. Incorporating other asset classes could enhance stability and reduce overall portfolio risk, especially during market downturns.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    13%
  • Consumer Discretionary
    13%
  • Health Care
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards technology at 24%, followed by financial services and industrials. This sectoral allocation can drive growth but also introduces volatility, particularly if tech experiences a downturn. Comparatively, the sector diversification is moderate, mirroring common benchmarks. To manage sector-specific risks, consider whether this concentration aligns with your risk tolerance and investment goals. Adjusting sector weights could help achieve a more balanced risk-return profile.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%

With 90% of assets in North America, the portfolio is significantly biased towards the U.S. market, limiting geographic diversification. This concentration may expose the portfolio to regional economic risks and miss out on growth opportunities in other regions. While a U.S. focus can be beneficial given its economic strength, consider increasing international exposure, particularly in emerging markets, to enhance diversification and potentially capture global growth.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    24%
  • Mid-cap
    20%
  • Small-cap
    17%
  • Micro-cap
    7%

The portfolio has a diverse range of market capitalizations, with a significant focus on mega and big-cap stocks, comprising 56% of the allocation. This mix provides stability and growth potential but may also limit exposure to the high-growth potential of smaller companies. While the current allocation is well-balanced, consider reviewing whether the balance between stability and growth aligns with your investment goals. Adjusting the allocation towards smaller market caps could enhance growth potential.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This approach helps achieve maximum returns for a given level of risk or minimize risk for a desired return. While the portfolio is already growth-oriented, consider whether adjustments within the current asset mix could further enhance efficiency. Regularly revisiting the allocation can help maintain alignment with evolving financial goals and market conditions.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Invesco S&P MidCap Quality ETF 4.90%
  • Weighted yield (per year) 2.02%

With a total dividend yield of 2.02%, this portfolio provides a modest income stream, primarily from the Invesco S&P MidCap Quality ETF. Dividend income can be a valuable component of total returns, especially during periods of market volatility. For growth-focused investors, reinvesting dividends can accelerate wealth accumulation. Evaluate whether the current yield meets your income needs or if adjustments to higher-yielding assets could better align with your financial objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is impressively low at 0.10%, supporting better long-term performance by minimizing costs. Lower costs mean more of your investment returns stay in your pocket, which can significantly impact compounding over time. This cost efficiency aligns well with industry best practices. Regularly review the TER to ensure it remains competitive, and consider exploring other low-cost investment options if needed to maintain this cost advantage.

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