A growth-focused portfolio with strong US equity exposure and moderate sector diversification

Report created on Dec 6, 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 US equities, with a significant 45% allocation to the Vanguard S&P 500 ETF. This provides broad exposure to large-cap US companies, which is complemented by a 20% allocation to the Avantis U.S. Small Cap Value ETF, offering exposure to smaller, potentially higher-growth companies. The VanEck Semiconductor ETF, also at 20%, adds a focused technology component. The remaining 15% is invested in the Vanguard Total International Stock Index Fund ETF Shares, providing global diversification. This composition leans towards growth with a focus on the US market, which may be suitable for investors seeking capital appreciation.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 20.37%. This indicates strong past returns, largely driven by the robust performance of US equities, particularly in the technology sector. However, it's important to remember that past performance is not indicative of future results. The portfolio experienced a maximum drawdown of -35.45%, highlighting potential volatility. Investors should be prepared for such fluctuations, especially in a growth-oriented portfolio. Consider maintaining a long-term perspective to ride out market volatility and capitalize on the portfolio's growth potential.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes. With 1,000 simulations, the portfolio shows a 5th percentile outcome of 91.04% and a median (50th percentile) return of 1,063.75%. This indicates that most scenarios result in positive returns, with 989 out of 1,000 simulations showing gains. While these projections provide insight into possible future performance, they rely on historical data and assumptions that may not hold true. Therefore, use them as one of several tools to inform your investment strategy, rather than a definitive prediction.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for over 99% of the allocation. This heavy emphasis on equities aligns with a growth-oriented strategy, aiming for capital appreciation over time. However, the lack of diversification across different asset classes, such as bonds or real estate, may increase the portfolio's vulnerability to market volatility. Consider incorporating other asset classes to potentially reduce risk and enhance stability, especially if your risk tolerance or investment horizon changes.

Sectors Info

  • Technology
    38%
  • Financials
    15%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Health Care
    7%
  • Telecommunications
    5%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation reveals a significant concentration in technology, comprising approximately 38% of the portfolio. While this sector has historically driven returns, it also introduces sector-specific risks, such as regulatory changes or technological disruptions. Other sectors, such as financial services and industrials, provide some balance but are less represented. To mitigate sector-specific risks, consider diversifying further across sectors. This can help stabilize returns and reduce the impact of adverse events affecting a single sector.

Regions Info

  • North America
    82%
  • Europe Developed
    7%
  • Asia Developed
    4%
  • Asia Emerging
    3%
  • Japan
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily concentrated in North America, with over 81% exposure. This focus on the US market provides access to one of the world's largest economies but also exposes the portfolio to regional risks, such as economic downturns or policy changes. The remaining exposure is spread across Europe, Asia, and other regions, offering some diversification. To enhance geographic diversification, consider increasing allocations to international markets, which can provide growth opportunities and reduce reliance on a single economic region.

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's current allocation could potentially be optimized using the Efficient Frontier, a concept in modern portfolio theory that seeks the best possible risk-return ratio. By adjusting the weights of existing assets, one could achieve a more efficient balance without necessarily adding new investments. This optimization aims to maximize returns for a given level of risk or minimize risk for a given level of return. Regularly reviewing and rebalancing the portfolio can help maintain its efficiency and align it with changing market conditions and personal investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.36%

The portfolio's dividend yield is relatively modest at 1.36%, reflecting its growth-oriented focus. The Vanguard Total International Stock Index Fund ETF Shares contributes the highest yield at 2.9%, while the VanEck Semiconductor ETF offers the lowest at 0.4%. While dividends provide a steady income stream, they are not the primary driver of returns in this portfolio. Investors seeking higher income may need to adjust their strategy or consider additional income-generating investments. Balancing growth with income can enhance overall portfolio performance.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.15%

With a total expense ratio (TER) of 0.15%, the portfolio is relatively cost-effective. The Vanguard S&P 500 ETF, with a low fee of 0.03%, helps keep overall costs down. However, the VanEck Semiconductor ETF and Avantis U.S. Small Cap Value ETF have higher fees of 0.35% and 0.25%, respectively. While these costs are not excessive, minimizing expenses can improve net returns over time. Consider reviewing the cost structure periodically and exploring lower-cost alternatives if available, without compromising on the portfolio's growth objectives.

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