A growth-focused portfolio with strong international exposure and moderate sector diversification

Report created on Dec 18, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs, with a significant 80% allocation to the Vanguard Total International Stock Index Fund ETF Shares. The remaining 20% is split equally between the Avantis® U.S. Small Cap Value ETF and the Vanguard S&P 500 ETF. This structure indicates a strong focus on international markets, with a smaller emphasis on U.S. small-cap value stocks and large-cap U.S. equities. Such a composition is relevant as it provides broad market exposure while maintaining a growth-oriented profile. To enhance diversification, consider including alternative asset classes or sectors that may not be currently represented.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.0%, which is a solid performance for a growth-focused strategy. However, it has also experienced a maximum drawdown of -36.11%, highlighting its exposure to market volatility. Understanding these metrics is crucial as they indicate potential risks and returns. While past performance is not indicative of future results, maintaining a diversified approach can help manage drawdowns. Consider reviewing your risk tolerance to ensure it aligns with the portfolio's historical volatility.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of possible returns for this portfolio. With 1,000 simulations, the 5th percentile projects a 28.58% return, while the 67th percentile projects a 704.22% return. This illustrates the inherent uncertainty and variability in investment outcomes. While simulations provide valuable insights, they are based on historical data and assumptions that may not hold in the future. Regularly reviewing and adjusting your portfolio based on market conditions and personal goals is recommended.

Asset classes Info

  • Stocks
    98%
  • Cash
    2%

The portfolio is heavily weighted towards stocks, with 98.36% of assets in equities, indicating a high-risk, high-return profile. Such a concentration in equities is typical for growth-oriented investors seeking substantial capital appreciation. However, this also increases exposure to market volatility. Diversifying into other asset classes like bonds or real estate could help reduce risk and stabilize returns. Consider evaluating your risk tolerance and investment goals to determine if additional asset class diversification is appropriate.

Sectors Info

  • Financials
    21%
  • Industrials
    15%
  • Technology
    14%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Basic Materials
    7%
  • Consumer Staples
    6%
  • Energy
    6%
  • Telecommunications
    6%
  • Utilities
    3%
  • Real Estate
    3%

Sector allocation in this portfolio is diverse, with significant weightings in financial services, industrials, and technology. This broad sectoral exposure helps mitigate risks associated with downturns in any single sector. However, the portfolio is less exposed to sectors like utilities and real estate, which can offer stability during economic downturns. Balancing exposure across various sectors can enhance resilience against sector-specific risks. Consider whether adjustments to sector allocations align with your investment strategy and risk appetite.

Regions Info

  • Europe Developed
    31%
  • North America
    26%
  • Asia Emerging
    13%
  • Japan
    12%
  • Asia Developed
    9%
  • Australasia
    4%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Europe Emerging
    1%

Geographically, the portfolio has a strong international presence, with notable allocations in Europe, North America, and Asia. This global diversification reduces reliance on any single economy and can buffer against regional downturns. However, emerging markets have less representation, which could limit growth potential from high-growth regions. Geographic diversification is essential for managing global economic risks. Assess whether increasing exposure to emerging markets aligns with your risk tolerance and long-term growth objectives.

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 can potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the existing asset allocations, it's possible to enhance efficiency without introducing new assets. This process involves identifying the optimal mix of current holdings to maximize returns for a given level of risk. Regularly reassessing and rebalancing your portfolio can help maintain its alignment with the Efficient Frontier, ensuring that you are achieving the best possible outcomes based on your risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.51%

The portfolio's dividend yield stands at 1.51%, with contributions from all three ETFs. While this yield provides a modest income stream, it is relatively low for income-focused investors. Dividends can offer a stable return component, particularly during periods of market volatility. If income generation is a priority, consider reallocating to higher-yielding assets or funds. Balancing growth and income objectives is key to achieving a well-rounded investment strategy that aligns with your financial goals.

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) 0.09%

The total expense ratio (TER) for this portfolio is 0.09%, which is relatively low and cost-effective. Lower costs are advantageous as they enhance long-term returns by reducing the drag on performance. Monitoring and minimizing investment costs is a crucial aspect of portfolio management. Consider periodically reviewing expense ratios and exploring cost-effective alternatives. Even small reductions in costs can have a significant impact on overall portfolio performance over time, contributing to better net returns.

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