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

Report created on Jan 16, 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 is predominantly composed of ETFs, with a significant allocation of 50% to the SPDR® Portfolio S&P 500 ETF. This indicates a strong focus on large-cap US equities. Additionally, 20% is invested in the Schwab U.S. Dividend Equity ETF, providing dividend income. The Vanguard Total International Stock Index Fund ETF Shares also represents 20% of the portfolio, offering international diversification. A smaller allocation of 10% to Avantis® U.S. Small Cap Value ETF adds exposure to smaller, potentially higher-growth US companies. This composition aligns with a growth-oriented strategy, balancing large-cap stability with opportunities in small-cap and international markets.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 14.5%, which is quite strong. However, it experienced a maximum drawdown of -34.95%, indicating significant volatility during downturns. This aligns with the growth-focused nature, where higher returns come with higher risks. Compared to common benchmarks, this performance suggests competitive returns. It's important to remember that past performance doesn't guarantee future results, but the historical data provides a useful benchmark for expectations. Monitoring for consistent performance and adjusting as needed can help maintain a favorable risk-return balance.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of possible returns. With 1,000 simulations, the 5th percentile outcome is 22.64%, while the median is 413.87%, and the 67th percentile is 640.35%. This indicates a generally optimistic outlook, but also highlights the inherent uncertainty in projections. While most simulations resulted in positive returns, it's crucial to understand that these are hypothetical scenarios and not guarantees. Regularly reviewing projections and adjusting strategies can help manage expectations and align with long-term goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, comprising over 99% of the total allocation. This high concentration in equities supports a growth-oriented approach, offering potential for higher returns. However, it also increases exposure to market volatility. Compared to diversified benchmarks, this allocation lacks fixed income or alternative assets that could provide stability during market downturns. To enhance diversification, consider incorporating other asset classes, such as bonds or real estate, which can help mitigate risk and potentially smooth out returns over time.

Sectors Info

  • Technology
    22%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    10%
  • Consumer Staples
    7%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with significant exposure to Technology (22.13%), Financial Services (17.60%), and Consumer Cyclicals (11.79%). This mirrors common benchmark trends, suggesting a balanced approach to sector diversification. However, the portfolio is notably tech-heavy, which may lead to increased volatility during periods of rising interest rates. Maintaining awareness of sector trends and potential risks is crucial. Consider rebalancing if certain sectors become overrepresented, ensuring alignment with broader market conditions and personal risk tolerance.

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%

The geographic allocation is heavily skewed towards North America, representing 81% of the portfolio. While this aligns with a US-centric investment strategy, it limits exposure to international markets. Europe Developed and Asia Emerging provide some diversification, but are relatively small components. Compared to global benchmarks, this allocation could benefit from greater international diversification to reduce regional risk. Evaluating opportunities in underrepresented regions may enhance the portfolio's resilience against localized economic downturns.

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 could be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This involves adjusting the allocation among existing ETFs to find the most efficient balance. Efficiency here means maximizing returns for a given level of risk. While the portfolio is already well-structured, exploring optimization opportunities can fine-tune performance. Regularly reviewing and adjusting allocations can help maintain alignment with evolving market conditions and personal investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.21%

The portfolio's total dividend yield is 2.21%, primarily driven by the Schwab U.S. Dividend Equity ETF and the Vanguard Total International Stock Index Fund ETF Shares. This yield provides a steady income stream, which is beneficial for reinvestment or income-focused strategies. For growth-oriented investors, dividends can offer a buffer during market downturns. It's important to monitor dividend sustainability and consider reinvesting dividends to maximize compounding effects. Balancing growth and income can enhance overall portfolio performance.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which is a positive aspect for long-term performance. Lower costs mean more of your investment returns stay in your pocket, enhancing compounding over time. Compared to industry averages, this cost structure is highly competitive. While the current costs are favorable, it's still wise to periodically review and compare expense ratios of similar funds to ensure continued cost efficiency. Keeping fees low is a straightforward way to improve net returns.

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