A growth-focused emerging markets ETF portfolio with moderate diversification and risk exposure
Risk profile
- Secure Speculative
The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.
Diversification profile
- Focused Diversified
The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.
What type of investor this portfolio is suitable for
Growth Investors
This portfolio suits an investor with a high risk tolerance seeking aggressive growth through emerging markets exposure. It is ideal for those with a long-term investment horizon, willing to accept volatility for potential higher returns. The focus on equities and emerging markets aligns with goals of capturing growth in developing regions. Investors should be comfortable with potential market fluctuations and have a strategy to manage risk, such as periodic rebalancing or diversification.
Positions
-
Schwab Emerging Markets Equity ETF
SCHE - US8085247067 100.00%
The portfolio consists entirely of the Schwab Emerging Markets Equity ETF, representing a concentrated exposure to emerging market equities. This single-asset composition implies limited diversification across asset classes, as it lacks bonds or alternative investments. While it is labeled broadly diversified, this classification pertains to the ETF's internal diversification across various sectors and regions. Compared to a benchmark portfolio with a mix of stocks, bonds, and other assets, this portfolio leans heavily towards equities, which may increase volatility. To enhance diversification, consider incorporating additional asset classes such as bonds or real estate.
Growth
The portfolio's historic performance shows a CAGR of 5.64%, indicating moderate growth over time. Compared to global equity benchmarks, this rate is reasonable but not exceptional. The maximum drawdown of -36.15% highlights significant volatility, typical for emerging markets. Historical performance provides insight into past trends but doesn't guarantee future results. The concentrated nature of the portfolio means it may react strongly to market shifts. To potentially enhance returns, consider diversifying with assets that historically perform well during market downturns.
Projection
The forward projection uses Monte Carlo simulations to estimate potential future outcomes based on historical data. With 1,000 simulations, the median outcome suggests a 70.9% increase, while the 5th percentile indicates a potential -54.6% loss. This wide range reflects the inherent uncertainty and volatility in emerging markets. Monte Carlo analysis helps gauge risk and return scenarios but is only a model and not a prediction. To manage risk, consider strategies that include a mix of asset classes or geographic diversification to potentially stabilize returns.
Asset classes
- Stocks 99%
- Cash 1%
- No data 0%
- Other 0%
- Bonds 0%
The portfolio is heavily weighted towards equities, with 99% allocated to stocks and a negligible 1% to cash. This singular focus on equities enhances growth potential but also increases volatility. Compared to a balanced portfolio, this allocation lacks the stabilizing influence of bonds or other asset classes. The absence of bonds means the portfolio may not benefit from the typical risk-reducing characteristics they provide. To potentially smooth returns and reduce risk, consider adding fixed-income assets or other asset classes that offer diversification benefits.
Sectors
- Financials 23%
- Technology 19%
- Consumer Discretionary 14%
- Telecommunications 10%
- Industrials 7%
- Basic Materials 7%
- Energy 5%
- Consumer Staples 5%
- Health Care 4%
- Utilities 3%
- Real Estate 2%
The portfolio is diversified across 11 sectors, with significant allocations to Financial Services (23%), Technology (19%), and Consumer Cyclicals (14%). This sectoral spread supports diversification within the equity asset class. However, a tech-heavy allocation may lead to higher volatility, especially during periods of interest rate hikes. The sector distribution aligns well with emerging market trends but may be susceptible to sector-specific risks. To further mitigate these risks, regularly review sector allocations and consider rebalancing if any sector becomes overly dominant.
Regions
- Asia Emerging 60%
- Asia Developed 18%
- Africa/Middle East 11%
- Latin America 7%
- Europe Emerging 2%
- Europe Developed 1%
- North America 0%
The portfolio's geographic allocation is predominantly in Asia Emerging (60%), with smaller exposures to Asia Developed (18%) and Africa/Middle East (11%). This focus on emerging markets provides growth potential but also exposes the portfolio to regional economic and political risks. Compared to global benchmarks, the lack of exposure to North America and Europe Developed may limit diversification. To potentially reduce regional risk, consider incorporating developed market equities or funds that provide broader geographic exposure.
Market capitalization
- Mega-cap 53%
- Large-cap 33%
- Mid-cap 11%
- Small-cap 1%
- Micro-cap 0%
The portfolio has a strong focus on large-cap stocks, with 53% in mega-cap and 33% in big-cap companies. This tilt towards larger companies may offer some stability and liquidity compared to small-cap stocks. However, the limited exposure to medium and small-cap stocks may restrict growth potential, as smaller companies often drive innovation and higher returns. To balance this, consider adding mid or small-cap equities to capture potential growth from emerging companies in these markets.
Dividends
- Schwab Emerging Markets Equity ETF 2.90%
- Weighted yield (per year) 2.90%
The Schwab Emerging Markets Equity ETF offers a dividend yield of 2.90%, contributing to overall portfolio returns. Dividends provide a steady income stream, which can be particularly valuable in volatile markets. This yield is relatively attractive compared to global equity averages, adding a layer of return beyond capital appreciation. However, reliance on dividends may not align with a growth-focused strategy. To enhance income, consider additional high-yield investments or dividend-focused funds.
Ongoing product costs
- Schwab Emerging Markets Equity ETF 0.11%
- Weighted costs total (per year) 0.11%
The portfolio's Total Expense Ratio (TER) is 0.11%, which is impressively low and supports better long-term performance by minimizing costs. This cost efficiency is beneficial for maximizing net returns, especially in a growth-focused strategy. Compared to industry averages, this TER is competitive and aligns with best practices for cost-effective investing. To maintain this advantage, regularly review fund expenses and consider switching to lower-cost alternatives if available.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
