A growth-focused portfolio with broad diversification and strong historical performance metrics

Report created on Jan 14, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists of three ETFs with a heavy emphasis on the Vanguard S&P 500 ETF, which makes up 60% of the allocation. The remaining 40% is split equally between the Avantis U.S. Small Cap Value ETF and the Vanguard Total International Stock Index Fund ETF. This composition reflects a common growth-oriented approach, with a strong bias towards large-cap U.S. equities, complemented by exposure to small-cap and international markets. While this allocation aligns with growth objectives, it may benefit from further diversification into other asset classes like bonds to mitigate potential risks.

Growth Info

Historically, the portfolio has delivered impressive returns, with a Compound Annual Growth Rate (CAGR) of 15.03%. This performance is commendable, especially when compared to typical market benchmarks. However, it's important to note the portfolio's maximum drawdown of -36.31%, indicating significant volatility during downturns. While past performance is no guarantee of future results, these figures suggest a robust growth trajectory, albeit with periods of heightened risk. Investors should be prepared for potential fluctuations and consider strategies to manage downside risk.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a range of potential returns. With 1,000 simulations, the median return is projected at 443.55%, while the 5th percentile shows 12.56%, and the 67th percentile projects 699.74%. These projections suggest a high likelihood of positive outcomes, with 962 simulations yielding gains. However, remember that these are hypothetical scenarios, and actual future performance can vary. Investors should use these projections as a guide rather than a guarantee, maintaining flexibility in their strategies.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with 99.5% allocated to equities and minimal cash and other assets. This concentration in equities aligns with growth objectives but may expose the portfolio to higher volatility. Diversification across different asset classes, such as bonds or alternative investments, could help balance risk and provide more stable returns. Comparing this allocation to a typical balanced portfolio, which might include 60% stocks and 40% bonds, highlights the aggressive nature of this portfolio's strategy.

Sectors Info

  • Technology
    24%
  • Financials
    18%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is well-distributed, with notable weights in technology, financial services, and consumer cyclicals. This diversified sector exposure aligns closely with common benchmarks, supporting the portfolio's growth potential. However, the heavy concentration in technology could lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. Investors might consider periodically reviewing sector weights to ensure alignment with market trends and personal risk tolerance, potentially adjusting to mitigate sector-specific risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 80.86% exposure, followed by smaller allocations in Europe and Asia. This concentration aligns with the U.S.-centric nature of the underlying ETFs but may limit diversification benefits. While the U.S. market has been a strong performer, diversification into other regions could reduce risk and capture growth opportunities in emerging markets. Investors should assess whether this geographic exposure aligns with their long-term goals and consider adjustments to enhance global diversification.

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 asset allocation can be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio. This optimization focuses on adjusting the current asset weights to achieve the highest expected return for a given level of risk. While the portfolio is already well-diversified, exploring potential reallocations among the existing ETFs might enhance efficiency. It's important to note that this approach doesn't guarantee diversification benefits but seeks to optimize returns relative to risk.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.78%

With a total dividend yield of 1.78%, the portfolio offers a moderate income stream, primarily driven by the Vanguard Total International Stock Index Fund's 3.4% yield. Dividends can provide a buffer during volatile markets and contribute to total returns. For growth-focused investors, reinvesting dividends can compound returns over time. However, if income is a priority, exploring higher-yielding assets or dividend-focused strategies might be beneficial. Regularly reviewing dividend contributions can help ensure they align with overall investment 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%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, reflecting the cost-efficient nature of the selected ETFs. Low costs are beneficial for long-term performance, as they reduce the drag on returns. This cost structure is well-aligned with best practices for minimizing fees, allowing more of the portfolio's returns to be retained. Investors should continue to monitor expense ratios and consider replacing any higher-cost funds with similar, lower-cost alternatives to maintain this efficiency.

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