Growth-Oriented Portfolio Balancing Risk and Diversification with Strong Historic Performance and Broad Geographic Exposure

Report created on Dec 4, 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 composed of four ETFs, making it broadly diversified across different market segments. It includes a significant allocation to the Vanguard S&P 500 ETF, which represents a large portion of the portfolio, focusing on large-cap U.S. equities. Additionally, there is exposure to small-cap value stocks and dividend-paying equities through the Avantis U.S. Small Cap Value ETF and Schwab U.S. Dividend Equity ETF, respectively. The Vanguard Total International Stock Index Fund provides international diversification. This mix offers a balanced approach to growth and income. Consider maintaining this diversification to manage risk and potential returns effectively.

Growth Info

Historically, this portfolio has performed well, with a compound annual growth rate (CAGR) of 15.6%. The maximum drawdown of -36.32% indicates potential volatility, but the strong CAGR suggests robust growth over time. The portfolio's performance is concentrated, with just 15 days accounting for 90% of returns, highlighting the importance of staying invested during volatile periods. This historical insight suggests a need for patience and a long-term perspective. To continue benefiting from such growth, it is advisable to maintain a disciplined approach and avoid reacting to short-term market fluctuations.

Projection Info

Using a Monte Carlo simulation, which analyzes potential future outcomes by running numerous scenarios, the portfolio shows promising projections. Assuming a hypothetical initial investment, the simulations indicate a median growth of 541.16% over the investment horizon, with 981 out of 1,000 simulations yielding positive returns. This suggests a favorable risk-return profile, with an annualized return of 16.61%. While projections are not guarantees, they provide a sense of potential outcomes. It's important to regularly review the portfolio to ensure it aligns with evolving financial goals and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with 99.62% allocated to equities, which is typical for a growth-oriented strategy. This high equity exposure offers the potential for significant capital appreciation, albeit with increased volatility. The minimal allocations to cash and other asset classes suggest a focus on maximizing growth. While this can be beneficial in a rising market, it may expose the portfolio to higher risk during downturns. To mitigate this risk, consider periodically reviewing the asset allocation to ensure it aligns with your risk tolerance and investment objectives.

Sectors Info

  • Technology
    19%
  • Financials
    19%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Energy
    8%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with significant exposure to technology, financial services, and industrials. These sectors are known for their growth potential, contributing to the portfolio's overall performance. However, the concentration in these areas may introduce sector-specific risks. The portfolio also includes exposure to consumer cyclicals, healthcare, and energy, providing a balanced mix of growth and defensive sectors. To optimize sector allocation, regularly assess the economic environment and adjust exposure as needed to maintain a balanced risk profile.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 80.77% of assets allocated to this region. This concentration provides exposure to the robust U.S. market but may limit diversification benefits. The portfolio also includes allocations to Europe, Asia, and other regions, offering some international diversification. However, the limited exposure to emerging markets suggests potential opportunities for further diversification. Consider evaluating geographic allocation periodically to ensure it aligns with global economic trends and offers a balanced risk-return profile.

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 is well-positioned on the efficient frontier, balancing risk and return effectively. However, there is room for optimization by adjusting the allocation to achieve either a riskier or more conservative stance. Moving towards a riskier portfolio involves increasing equity exposure, while a more conservative approach would involve incorporating more fixed-income assets. Before optimizing, focus on maintaining a diversified and cost-effective portfolio. Ensure that any changes align with risk tolerance and financial goals, allowing for adjustments based on market conditions and personal circumstances.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 2.02%

The portfolio's dividend yield stands at 2.02%, providing a moderate income stream alongside growth potential. The Schwab U.S. Dividend Equity ETF contributes significantly to this yield with a 3.3% dividend, while other ETFs offer lower yields. This blend of growth and income can appeal to investors seeking both capital appreciation and regular income. To optimize income potential, consider periodically reviewing dividend yields and distributions, ensuring they align with income needs and overall investment strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, indicating low investment costs, which is beneficial for long-term growth. The Vanguard S&P 500 ETF and Schwab U.S. Dividend Equity ETF offer particularly low expense ratios, contributing to cost efficiency. Keeping costs low is crucial as it directly impacts net returns. To maintain cost efficiency, regularly review the expense ratios of each holding and consider cost-effective alternatives if necessary. Ensuring that the portfolio remains cost-efficient will help maximize returns over time.

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