Balanced Growth Portfolio with Focus on U.S. Stocks and Moderate Risk Suitable for Long-Term Investors

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio is ideal for growth-oriented investors who are comfortable with moderate risk and have a long-term investment horizon. Such investors typically seek capital appreciation over income and are willing to endure market fluctuations for potential high returns. They value the potential for significant growth and are less concerned with short-term market volatility. With a focus on U.S. equities and sector-specific investments, this portfolio suits those looking to leverage market trends and capitalize on economic growth within the United States.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • SPDR® S&P MIDCAP 400 ETF Trust
    MDY - US78467Y1073
    10.00%
  • Vanguard Energy Index Fund ETF Shares
    VDE - US92204A3068
    10.00%
  • Vanguard Financials Index Fund ETF Shares
    VFH - US92204A4058
    10.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    10.00%

The portfolio is heavily weighted towards U.S. equities, with a significant 50% allocation to the Vanguard S&P 500 ETF. The remaining 50% is divided equally among five other ETFs, each contributing 10% to the total portfolio. This composition indicates a strong focus on the U.S. market, with little exposure to international equities. While the portfolio is concentrated, it does provide exposure to different market segments, including small caps and specific sectors like energy and technology. A more balanced approach could enhance diversification and reduce risk.

Growth Info

Historically, this portfolio has demonstrated impressive growth, with a compound annual growth rate (CAGR) of 18.52%. However, it has also experienced volatility, with a maximum drawdown of -38.68%. This suggests that while the portfolio has the potential for high returns, it is also susceptible to significant fluctuations. The concentration in U.S. equities, particularly large-cap stocks, has likely contributed to this volatility. To mitigate this risk, consider diversifying into other asset classes or regions, which can help stabilize returns over time.

Projection Info

Using a Monte-Carlo simulation, which models potential future returns based on historical data, the portfolio shows a range of possible outcomes. With 1,000 simulations, the median outcome suggests an 806.09% increase, while the 5th percentile indicates a 49.23% gain. This highlights the portfolio's potential for substantial growth, albeit with risk. The simulation's annualized return of 21.06% reflects optimistic long-term prospects but underscores the importance of diversification to manage potential downsides. Consider exploring additional asset classes to enhance resilience against market volatility.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is almost entirely invested in stocks, with a negligible cash position of 0.38%. This high equity exposure suggests a strong growth focus, but it also increases vulnerability to market downturns. While equities can offer substantial returns, they come with higher risk compared to other asset classes like bonds or real estate. To achieve a more balanced risk-return profile, consider incorporating fixed-income securities or alternative investments. This could provide stability and income, especially during periods of market turbulence.

Sectors Info

  • Technology
    29%
  • Financials
    20%
  • Energy
    14%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio's sector allocation is heavily skewed towards technology, financial services, and energy, making up over 60% of the total. This concentration can lead to significant sector-specific risk, especially if these industries face downturns. While sector concentration can drive returns in favorable conditions, it may also result in increased volatility. To mitigate this risk, consider diversifying across a broader range of sectors. This approach can help stabilize returns and reduce the impact of sector-specific challenges on the overall portfolio.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99.08% of assets allocated to this region. This lack of international diversification exposes the portfolio to regional economic and political risks. While the U.S. market has historically been strong, global diversification can provide access to growth opportunities in emerging markets and other developed economies. Consider increasing exposure to international equities to enhance diversification and capture potential growth in other regions, which could also reduce the portfolio's overall risk.

Redundant positions Info

  • Avantis® U.S. Small Cap Value ETF
    Vanguard Information Technology Index Fund ETF Shares
    SPDR® S&P MIDCAP 400 ETF Trust
    Vanguard Financials Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio exhibits high correlation among its assets, particularly between the Avantis U.S. Small Cap Value ETF, Vanguard Information Technology Index Fund ETF Shares, and others. This suggests that these assets tend to move in tandem, which could amplify portfolio volatility. High correlation can limit the benefits of diversification, as losses in one asset may not be offset by gains in another. To reduce correlation, consider adding assets with low or negative correlation to the existing holdings. This can help smooth out returns and reduce overall portfolio risk.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • SPDR® S&P MIDCAP 400 ETF Trust 1.10%
  • Vanguard Energy Index Fund ETF Shares 2.90%
  • Vanguard Financials Index Fund ETF Shares 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.37%

The portfolio's dividend yield stands at 1.37%, with notable contributions from the Vanguard Energy Index Fund ETF Shares at 2.9% and the Vanguard Financials Index Fund ETF Shares at 1.6%. While this yield provides some income, it is relatively modest compared to other income-focused investments. Dividends can be an important source of returns, especially in volatile markets. To enhance income generation, consider increasing exposure to dividend-paying stocks or funds. This could provide a more stable income stream and complement the portfolio's growth-oriented strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR® S&P MIDCAP 400 ETF Trust 0.24%
  • Vanguard Energy Index Fund ETF Shares 0.10%
  • Vanguard Financials Index Fund ETF Shares 0.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is a low 0.09%, with the Vanguard S&P 500 ETF contributing the least at 0.03%. This reflects a cost-effective investment strategy, as lower fees can significantly enhance net returns over time. Keeping costs low is crucial for optimizing long-term performance, as high fees can erode gains. While the current cost structure is favorable, it's important to regularly review and evaluate the fees associated with each investment. This ensures that the portfolio remains efficient and aligned with financial 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.

The current portfolio setup shows overlapping assets with high correlations, suggesting limited optimization potential. Instead, focus on increasing diversification by incorporating low-correlated assets or other asset classes. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. For those seeking higher risk and returns, increasing equity exposure or sector concentration might be suitable. Conversely, for a more conservative approach, consider adding bonds or other low-risk assets. Balancing risk and return according to personal financial goals is key.

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