Broadly Diversified Growth Portfolio with Moderate Risk and Strong Historical Performance

Report created on Dec 3, 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 consists of four ETFs, with a significant 50% allocation to the Vanguard Total Stock Market Index Fund ETF Shares. This creates a solid foundation of broad market exposure. The remaining allocations include 20% in Avantis® U.S. Small Cap Value ETF, 20% in Vanguard Total International Stock Index Fund ETF Shares, and 10% in Vanguard International Dividend Appreciation Index Fund ETF Shares. This composition reflects a well-diversified portfolio, with a strong focus on equities. The broad diversification across different ETFs helps in spreading risk and capturing potential growth from various market segments.

Growth Info

Historically, the portfolio has shown robust performance with a compound annual growth rate (CAGR) of 15.16%. This indicates a strong return on investment over the years. However, it also experienced a maximum drawdown of -36.55%, highlighting the potential volatility and risk associated with it. The fact that 90% of returns were generated in just 15 days suggests that the portfolio's performance is driven by short bursts of significant gains. This underscores the importance of staying invested during volatile periods to capture these high-return days.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising forward projections. With a hypothetical initial investment, the median (50th percentile) outcome suggests a potential growth of 395.92%, while the 67th percentile indicates an even higher growth of 650.77%. This simulation helps in understanding the range of possible future outcomes, providing insights into potential risks and returns. The high percentage of simulations with positive returns (962 out of 1,000) reinforces the portfolio's potential for future growth, albeit with inherent risks.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.55% of the asset allocation. This suggests a strong focus on equity markets, aiming for growth over the long term. A small portion is held in cash (0.43%) and other assets (0.02%), providing minimal diversification outside equities. This asset class distribution aligns with a growth-oriented strategy, suitable for investors with a higher risk tolerance. To balance risk, consider incorporating more fixed-income assets, which could provide stability during market downturns.

Sectors Info

  • Technology
    21%
  • Financials
    18%
  • Industrials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Consumer Staples
    6%
  • Energy
    6%
  • Telecommunications
    6%
  • Basic Materials
    5%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is diversified across various sectors, with a notable emphasis on Technology (20.73%), Financial Services (18.10%), and Industrials (13.23%). Such sector allocation reflects a balanced approach, capturing growth opportunities across different industries. However, the concentration in these sectors can lead to increased volatility if they experience downturns. To mitigate sector-specific risks, consider further diversification by reducing exposure to highly concentrated sectors and increasing allocation to underrepresented ones, ensuring a more balanced sectoral distribution.

Regions Info

  • North America
    72%
  • Europe Developed
    13%
  • Japan
    6%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly invested in North America (72.16%), with additional exposure to Europe Developed (12.79%) and Japan (5.66%). This allocation provides substantial exposure to developed markets, which are generally more stable and less volatile. However, the limited allocation to emerging markets may restrict potential growth opportunities. To enhance geographic diversification, consider increasing exposure to emerging markets, which can offer higher growth potential and reduce dependency on North American market performance.

Redundant positions Info

  • Vanguard International Dividend Appreciation Index Fund ETF Shares
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, notably between the Vanguard International Dividend Appreciation Index Fund ETF Shares and the Vanguard Total International Stock Index Fund ETF Shares. High correlation indicates that these assets tend to move in the same direction, reducing diversification benefits. To optimize diversification, consider reducing exposure to one of these correlated assets and reallocating to less correlated investments. This can help in achieving a more balanced portfolio, minimizing risk while maintaining potential returns.

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.

Before optimizing, address overlapping assets that offer little diversification benefits. By removing highly correlated assets, the portfolio can achieve better diversification, potentially enhancing returns while managing risk. To pursue a riskier portfolio, increase exposure to equities or more volatile asset classes. Conversely, for a more conservative approach, consider adding bonds or other fixed-income securities. Navigating along the efficient frontier allows for adjustments in risk and return, aligning the portfolio with specific financial goals and risk appetite.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 2.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.70%

The portfolio offers a total dividend yield of 1.7%, with contributions from each ETF. The Vanguard Total International Stock Index Fund ETF Shares provides the highest yield at 3.0%, followed by the Vanguard International Dividend Appreciation Index Fund ETF Shares at 2.0%. Dividends can provide a steady income stream and contribute to total returns. To enhance income generation, consider increasing allocation to higher-yielding assets or funds. However, ensure this aligns with overall investment goals and risk tolerance, as higher yields may come with increased risk.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The total expense ratio (TER) of the portfolio is 0.1%, reflecting a low-cost structure. The Vanguard Total Stock Market Index Fund ETF Shares has the lowest cost at 0.03%, while the Avantis® U.S. Small Cap Value ETF is the highest at 0.25%. Keeping costs low is crucial for maximizing net returns over time. This cost-efficient structure allows more of the portfolio's returns to be retained. To maintain cost-effectiveness, continue focusing on low-cost investment options, ensuring that expense ratios remain competitive and do not erode long-term returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

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.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey