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

Report created on Jan 8, 2025

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 60% allocation to the Vanguard Total Stock Market Index Fund ETF. This suggests a strong focus on US equities. The remaining 40% is divided between international equities, with 20% in the Vanguard Total International Stock Index Fund ETF and smaller allocations to Avantis International and US Small Cap Value ETFs. This composition leans heavily towards equities, aligning with a growth-focused strategy. Compared to a typical balanced portfolio, it lacks fixed income exposure, which may increase volatility. Consider whether this equity-heavy allocation aligns with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.13%, indicating strong past performance. However, it's important to note the maximum drawdown of -36.32%, which highlights potential volatility. While past performance is encouraging, it doesn't guarantee future results. The portfolio's performance is compared to benchmarks, and it aligns well with growth-focused strategies. Investors should be prepared for fluctuations and ensure they have the risk tolerance to withstand potential downturns.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a wide range of potential returns. The median (50th percentile) simulation suggests a 351.72% increase, while the 5th percentile projects a modest 2.8% growth. This variability underscores the inherent uncertainty in predicting future performance. While the simulations provide a useful guide, they rely on historical data, which may not capture future market conditions. Investors should use these projections as one of many tools in their decision-making process.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash, bonds, and other assets. This concentration in equities may enhance potential returns but also increases exposure to market volatility. Compared to a diversified portfolio with a mix of asset classes, this allocation is aggressive. Consider whether the lack of fixed income or alternative investments aligns with your risk tolerance and goals. Diversifying into other asset classes could help mitigate risk during market downturns.

Sectors Info

  • Technology
    22%
  • Financials
    17%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    5%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio's sector allocation shows a significant tilt towards technology (22.12%), followed by financial services (16.87%) and industrials (12.34%). This concentration in tech may lead to higher volatility, especially in rising interest rate environments. Compared to common benchmarks, the sector allocation is relatively balanced but leans towards growth-oriented sectors. Consider whether this sector exposure aligns with your views on market trends. Adjusting sector weights could help manage risk and capitalize on emerging opportunities.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Japan
    6%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (72.24%), with moderate exposure to Europe Developed (11.99%) and Japan (6.29%). This concentration in North America may limit diversification benefits. Compared to global benchmarks, the portfolio is underexposed to emerging markets, which could offer growth potential. Consider whether increasing exposure to underrepresented regions aligns with your investment strategy. Broadening geographic diversification can help mitigate regional risks and capture global growth opportunities.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This optimization focuses on reallocating existing assets to achieve greater efficiency. While the portfolio is already growth-oriented, consider whether minor adjustments could enhance returns without significantly increasing risk. Optimization doesn't guarantee diversification or other goals but can improve the overall performance of the portfolio.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.03%

The portfolio's dividend yield is 2.03%, with notable contributions from the Avantis International Small Cap Value ETF (4.3%) and the Vanguard Total International Stock Index Fund ETF (3.3%). Dividends can provide a steady income stream, which is valuable in volatile markets. The yield aligns with a growth-focused strategy, offering potential for both capital appreciation and income. Consider whether dividend income is a priority for your investment goals. If so, adjusting the portfolio to increase yield could enhance income generation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • 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 portfolio's total expense ratio (TER) is impressively low at 0.1%, with the Vanguard Total Stock Market Index Fund ETF having the lowest cost at 0.03%. Low costs are a significant advantage, as they support better long-term performance by reducing the drag on returns. Compared to industry averages, this TER is highly competitive. Maintaining low costs should remain a priority. Regularly review the portfolio to ensure that expense ratios remain competitive and explore opportunities to reduce costs further.

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