Growth-Focused Portfolio with High Risk and Moderate Diversification in U.S. and International Markets

Report created on Dec 1, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. large-cap growth stocks, with a substantial portion also allocated to mid-cap momentum and small-cap value ETFs. This composition indicates a strong focus on growth, with a moderate level of diversification. The inclusion of international small-cap value stocks adds some geographical diversification but remains largely U.S.-centric. This setup is suitable for investors looking to capitalize on growth opportunities, but it may expose the portfolio to higher volatility, especially in downturns.

Growth Info

Historically, the portfolio has delivered impressive returns with a CAGR of 20.15%. However, the max drawdown of -36.39% highlights the potential for significant losses during market downturns. This performance suggests that while the portfolio has the potential for high returns, it also carries considerable risk. Investors should be prepared for periods of volatility and ensure that their risk tolerance aligns with the possibility of substantial fluctuations in portfolio value.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, the portfolio shows promising forward projections. The median outcome suggests a potential growth of 826.26%, with a 67th percentile outcome reaching up to 1,412.89%. These projections indicate a high likelihood of positive returns, with 983 out of 1,000 simulations yielding gains. While the annualized return across simulations is 20.68%, it's important to remember that these are hypothetical scenarios and actual future performance can vary.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely invested in stocks, with a negligible allocation to cash and bonds. This heavy stock allocation aligns with a growth-focused strategy but contributes to the portfolio's high-risk profile. A more balanced approach, incorporating a greater variety of asset classes, could help mitigate risk and provide more stability. Investors should consider their risk tolerance and whether they need a more diversified asset class mix to achieve their investment goals.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    15%
  • Industrials
    14%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    5%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

The sector allocation is concentrated in technology, financial services, and consumer cyclicals, which together make up more than half of the portfolio. This concentration can lead to increased risk if these sectors underperform. A more balanced sector distribution could reduce sector-specific risk and enhance diversification. Investors should be aware of sector trends and consider rebalancing if needed to maintain a diversified exposure across different industries.

Regions Info

  • North America
    68%
  • Europe Developed
    5%
  • Japan
    4%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with limited exposure to other regions. While this aligns with the U.S.-centric nature of the portfolio, it may limit potential growth opportunities available in other markets. Increasing exposure to international markets could enhance diversification and provide a hedge against U.S.-specific risks. Investors should evaluate their comfort with geographical diversification and consider adjusting allocations to suit their preferences.

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 positioned along the efficient frontier, offering a balance between risk and return. However, there is room for optimization by adjusting the risk profile. Investors could consider increasing bond allocation for a more conservative approach or adding alternative assets for diversification. Moving along the efficient frontier allows for tailoring the portfolio to better match individual risk tolerance and financial goals, enhancing the potential for optimized performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P MidCap Momentum ETF 0.30%
  • Weighted yield (per year) 0.91%

The portfolio's dividend yield is relatively low at 0.91%, reflecting its growth-oriented nature. While dividends provide a steady income stream, the focus here is on capital appreciation rather than income generation. Investors seeking higher income might need to adjust the portfolio to include more dividend-paying assets. However, for those prioritizing growth, the current setup aligns well with achieving long-term capital gains.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.18%

The total expense ratio (TER) of 0.18% is quite competitive, reflecting the portfolio's focus on low-cost ETFs. Keeping costs low is crucial for maximizing net returns over time. The low TER is a positive aspect of the portfolio, allowing more of the investment's returns to be retained. Investors should continue to monitor expense ratios and ensure that costs remain minimal, contributing to the portfolio's overall efficiency and performance.

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