A growth-focused portfolio with a strong US equity bias and moderate international exposure

Report created on Dec 7, 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 is heavily weighted towards equities, with a significant 70% allocation to the Vanguard Total Stock Market Index Fund ETF. This is complemented by a 15% allocation to international stocks and a smaller 7.5% in small-cap value stocks. The remaining 7.5% is invested in bonds, providing a modest buffer against market volatility. This composition reflects a growth-oriented strategy, prioritizing potential capital appreciation over income. While the equity-heavy focus could drive higher returns, it's important to balance this with an understanding of the associated risks.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 14.76%. However, it has also experienced a maximum drawdown of -33.21%, indicating significant volatility during market downturns. This highlights the potential for large fluctuations in value, which is typical for growth-focused portfolios. While past performance is not indicative of future results, understanding these trends can help set realistic expectations. Investors should be prepared for periods of volatility and consider whether they have the risk tolerance to withstand such fluctuations.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a median potential growth of 299.16% over the investment horizon. This suggests a strong likelihood of positive returns, with 954 out of 1,000 simulations ending positively. However, it's important to note that simulations rely on historical data and assumptions, which may not hold true in the future. Investors should use these projections as a guide rather than a guarantee, maintaining flexibility to adjust their strategy as market conditions change.

Asset classes Info

  • Stocks
    92%
  • Bonds
    7%

The portfolio is predominantly composed of stocks, making up over 92% of the allocation, with bonds accounting for a mere 7.5%. This stock-heavy allocation is typical for growth portfolios, aiming to maximize capital gains. However, the limited bond exposure may reduce the portfolio's ability to cushion against market downturns. Diversifying further into bonds or other asset classes could potentially enhance risk-adjusted returns. Investors should assess their risk tolerance and consider whether a more balanced allocation might better align with their investment goals.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio is well-diversified across sectors, with a notable concentration in technology (24%) and financial services (15%). This sectoral allocation reflects a focus on industries with strong growth potential. However, the heavy tech weighting could increase vulnerability to sector-specific risks. While diversification across multiple sectors can mitigate risk, investors should monitor sector performance and consider rebalancing if certain sectors become overly dominant. A balanced approach can help ensure that the portfolio remains resilient across different economic cycles.

Regions Info

  • North America
    78%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 78% of the allocation. This reflects a strong bias towards the US market, which can be beneficial given its historical performance. However, this concentration may limit exposure to growth opportunities in other regions. International diversification can reduce geographic risk and provide access to different economic cycles. Investors should consider increasing exposure to emerging markets or other developed regions to enhance diversification and capture global growth potential.

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 seeks the best possible risk-return ratio based on current assets. By adjusting allocations, investors can aim for an optimal balance that maximizes returns for a given level of risk. This process involves analyzing historical returns and volatilities to identify the most efficient asset mix. While optimization can enhance performance, it's essential to consider personal risk tolerance and investment goals. Regular rebalancing may be necessary to maintain the optimized allocation as market conditions change.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with contributions from both equity and bond holdings. Dividends provide a steady income stream, which can be particularly valuable during periods of market uncertainty. While the yield is modest, it complements the growth focus by adding a layer of income. Investors seeking higher income might consider increasing allocations to higher-yielding assets or dividend-focused funds. Balancing growth and income can help achieve a more stable total return over the long term.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • 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) 0.05%

The total expense ratio (TER) for the portfolio is 0.05%, which is relatively low, reflecting the cost efficiency of the chosen ETFs. Keeping costs low is crucial for enhancing net returns over time, as high fees can erode gains. Investors should regularly review expense ratios and consider lower-cost alternatives if available. Maintaining a focus on cost-effective investment vehicles can significantly impact the portfolio's long-term performance, especially when compounded over many years.

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