A growth-focused portfolio with strong U.S. equity presence and moderate international diversification

Report created on Jan 11, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of four ETFs, with a significant allocation in U.S. equities through the Vanguard S&P 500 ETF and Avantis U.S. Small Cap Value ETF. Together, these account for 65% of the portfolio, emphasizing U.S. market exposure. The remaining 35% is allocated to international equities, split between developed and emerging markets. Compared to typical growth portfolios, this structure leans heavily on equities, with minimal exposure to bonds and other asset classes. This composition aligns well with the growth profile, favoring higher potential returns albeit with increased volatility.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 13.9%, indicating strong growth over time. This performance outpaces many typical benchmarks for growth portfolios. However, it's important to note the maximum drawdown of -38.1%, reflecting significant volatility during downturns. Such fluctuations are typical in growth-oriented portfolios, underscoring the importance of a long-term investment horizon. While past performance is not indicative of future results, the historical data suggests the portfolio has the potential to recover from market dips and achieve substantial returns over time.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, reflecting the inherent uncertainty in future market conditions. The 5th percentile outcome suggests a conservative growth of 12.59%, while the 67th percentile shows a potential increase of 564.03%. These simulations use historical data, which may not account for future market shifts. Nonetheless, the high number of simulations with positive returns (964 out of 1,000) suggests a favorable long-term outlook. Investors should remain aware that projections are not guarantees and should consider their risk tolerance when interpreting these results.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of the allocation, with negligible exposure to bonds and cash. This concentration in equities is typical for a growth-focused portfolio, aiming for higher returns at the expense of increased volatility. Compared to a balanced portfolio, this allocation lacks the stabilizing effect of bonds, which can buffer against market downturns. Investors seeking growth should be comfortable with this level of risk and potential for short-term losses, while those desiring more stability might consider gradually incorporating fixed-income assets.

Sectors Info

  • Financials
    19%
  • Technology
    19%
  • Industrials
    14%
  • Consumer Discretionary
    13%
  • Health Care
    8%
  • Energy
    7%
  • Basic Materials
    6%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is diversified across several sectors, with notable allocations in Financial Services, Technology, and Industrials. This sectoral spread provides exposure to different economic drivers, though the concentration in Financial Services and Technology suggests sensitivity to economic cycles and interest rate changes. Compared to a benchmark like the S&P 500, the portfolio is well-diversified, though investors should monitor sector trends that could impact performance. For instance, a tech-heavy allocation might experience volatility during periods of rising interest rates, while Financial Services could benefit from economic recovery.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Japan
    7%
  • Asia Emerging
    4%
  • Asia
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 67.4% exposure, followed by Europe and Japan. This allocation aligns with many global benchmarks but may limit exposure to high-growth regions like emerging Asia. While the U.S. market has historically been a strong performer, diversifying further into emerging markets could enhance growth potential and reduce dependency on North American performance. Investors should weigh the benefits of geographic diversification against potential risks and consider aligning their geographic exposure with their long-term investment goals.

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 shows potential for optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting allocations among the existing assets, the portfolio could potentially achieve a more favorable balance between risk and return. This does not necessarily imply adding new assets but rather fine-tuning current holdings. Investors should consider periodic reviews to assess whether the portfolio remains aligned with their risk tolerance and return objectives, making adjustments as necessary to ensure continued efficiency.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard 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 dividend yield stands at 2.21%, with contributions from both domestic and international ETFs. This yield provides a modest income stream, which can be reinvested to compound growth over time. While dividends are not the primary focus of a growth-oriented portfolio, they offer some downside protection and income stability. Investors who prioritize income may want to explore additional dividend-focused investments. However, the current yield is a positive feature, adding a layer of return beyond capital appreciation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is a low 0.13%, which is advantageous for long-term performance. Lower costs mean more of the returns are retained by the investor, compounding over time to enhance growth. This TER is competitive compared to many actively managed funds, which often have higher fees. Investors should continue to monitor costs and consider replacing high-fee assets with lower-cost alternatives where possible. Maintaining a low-cost structure is a key factor in achieving optimal long-term returns.

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