Balanced Growth Portfolio with Moderate Risk and Broad Diversification for Steady Long-Term Growth Potential

Report created on Nov 10, 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 allocation to the Vanguard S&P 500 ETF at 45% and the Avantis U.S. Small Cap Value ETF at 30%. It also includes 12.5% each in the Vanguard FTSE Developed Markets Index Fund ETF Shares and the Vanguard FTSE Emerging Markets Index Fund ETF Shares. This composition reflects a focus on U.S. equities with a mix of large-cap and small-cap value stocks, alongside exposure to developed and emerging markets. Such a mix can offer growth potential while maintaining a degree of diversification to help mitigate risks.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 15.97%, indicating strong performance over time. However, it experienced a maximum drawdown of -37.76%, reflecting potential volatility. The fact that only 16 days account for 90% of returns highlights the importance of staying invested for the long term. This performance suggests a growth-oriented strategy, benefiting from market upswings but also vulnerable during downturns. Maintaining discipline during volatile periods is crucial to capture the long-term growth potential of this portfolio.

Projection Info

A Monte Carlo simulation, using 1,000 scenarios, projects a wide range of potential outcomes for the portfolio. With a hypothetical initial investment, the 5th percentile shows a -2.12% return, while the median return is 350.47%, and the 67th percentile reaches 599.24%. These projections indicate a strong likelihood of positive returns, with 949 simulations showing gains. The annualized return across all simulations is 13.98%, underscoring the portfolio's potential for growth. This simulation highlights the importance of a long-term investment horizon to navigate potential market fluctuations.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99.3% in equities, a small cash component, and negligible allocations to other asset classes. Such a concentration in stocks aligns with a growth-oriented strategy, capitalizing on the long-term appreciation potential of equities. However, this also introduces higher risk, as equities can be volatile. To balance risk and reward, consider diversifying into other asset classes like bonds or real estate, which can provide stability and income during market downturns.

Sectors Info

  • Technology
    20%
  • Financials
    20%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Energy
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with significant exposure to Technology, Financial Services, Industrials, and Consumer Cyclicals. Technology leads at 20.44%, followed closely by Financial Services at 19.81%. This sector mix suggests a focus on growth and innovation, while also capturing value from established industries. While diversification across sectors can reduce sector-specific risks, it's essential to monitor sector performance and trends. Regularly reviewing sector weights can ensure alignment with broader market dynamics and personal investment goals.

Regions Info

  • North America
    75%
  • Asia Emerging
    8%
  • Europe Developed
    7%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly North American, with 75.49% allocated to this region. The remaining exposure is spread across Asia, Europe, and other regions. This allocation reflects a focus on U.S. markets, benefiting from their historical stability and growth prospects. However, it also introduces regional concentration risk. Expanding geographic diversification can enhance resilience against regional economic downturns and capture growth potential in emerging markets. Balancing domestic and international exposure can optimize risk-adjusted 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.

The portfolio optimization chart suggests potential for further optimization by adjusting the risk-return profile. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. For those seeking higher returns, increasing exposure to growth-oriented assets may be beneficial. Conversely, adding more conservative assets like bonds can reduce risk. It's essential to align any changes with personal risk tolerance and financial goals. Prioritizing a balanced approach can optimize the portfolio's performance and ensure alignment with long-term objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.70%

The portfolio's total dividend yield is 1.7%, with contributions from each ETF. The Vanguard FTSE Developed Markets Index Fund ETF Shares offers the highest yield at 3.0%, while the Avantis U.S. Small Cap Value ETF provides 1.5%. Dividends can enhance total returns and provide a steady income stream, especially during market downturns. While growth-focused, maintaining a balance between growth and income can be beneficial. Consider reinvesting dividends to compound returns over time, or using them for income, depending on personal financial needs.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, reflecting low costs associated with the chosen ETFs. The Vanguard S&P 500 ETF has the lowest expense ratio 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. Regularly reviewing expense ratios and exploring cost-effective investment options can help maintain portfolio efficiency. Low costs, combined with strategic asset allocation, can enhance overall portfolio performance and contribute to long-term financial success.

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