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A growth-focused portfolio with a strong US equity presence and moderate diversification

Report created on Dec 31, 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 equities, with 89.7% in stocks and only 9.9% in bonds. This composition leans towards growth, typical for investors seeking higher returns over time. Compared to a balanced portfolio, which might have a 60/40 stocks-to-bonds ratio, this portfolio is more aggressive. Such a high equity allocation can lead to greater volatility, but it also offers the potential for higher returns. To enhance diversification, consider increasing the bond allocation or adding other asset classes like real estate or commodities, which can provide stability during market downturns.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 14.4%. This outpaces many common benchmarks, indicating strong past performance. However, the maximum drawdown of -32.83% highlights the potential for significant losses during downturns. While past performance is encouraging, it's crucial to remember that it doesn't guarantee future results. To mitigate risk, consider strategies such as rebalancing or incorporating more defensive assets that can provide a buffer during market volatility.

Projection Info

The Monte Carlo simulation projects a broad range of potential outcomes for the portfolio, using historical data to estimate future performance. With 1,000 simulations, the median (50th percentile) return is projected at 410.47%, while the 5th percentile is 14.77%. This indicates a wide variability in potential returns, underscoring the portfolio's risk. While simulations provide a useful forecast, they are based on historical data and assumptions, which may not hold in the future. Regularly reviewing the portfolio and adjusting based on changing circumstances can help align it with your goals.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio is concentrated in equities, with a minimal allocation to bonds, which limits diversification. Stocks often provide higher returns but come with greater risk, while bonds can offer stability and income. Comparing this to a more diversified portfolio, which might include real estate or alternative investments, can highlight areas for improvement. Increasing exposure to different asset classes can reduce risk and improve overall returns. Consider incorporating more diverse asset classes to balance growth and stability, especially in volatile market conditions.

Sectors Info

  • Technology
    25%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards technology, comprising 25.3% of the total allocation. Other significant sectors include financial services and consumer cyclicals. This concentration in tech can lead to higher volatility, especially during periods of economic uncertainty or interest rate changes. While this sector has driven strong returns recently, it's crucial to maintain a balanced sector allocation to mitigate risks. Consider diversifying into underrepresented sectors like utilities or healthcare, which can provide stability and reduce overall portfolio risk.

Regions Info

  • North America
    75%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Developed
    2%
  • Asia Emerging
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic exposure is predominantly North American at 74.8%, with limited international diversification. This concentration may expose the portfolio to regional economic fluctuations and currency risks. Compared to a global benchmark, which might have a more balanced distribution across regions, this portfolio could benefit from increased exposure to emerging markets or developed regions outside North America. Expanding geographic diversification can reduce regional risks and capture growth opportunities in other markets.

Redundant positions Info

  • Avantis® U.S. Equity ETF
    Vanguard S&P 500 ETF
    High correlation
  • iShares Core S&P Small-Cap ETF
    Avantis® U.S. Small Cap Value ETF
    High correlation

The portfolio contains highly correlated assets, such as the Avantis U.S. Equity ETF and the Vanguard S&P 500 ETF. High correlation means these assets tend to move in the same direction, limiting diversification benefits. During market downturns, this could lead to amplified losses. Reducing correlations by selecting assets with different performance drivers can enhance diversification. Consider reallocating to less correlated assets, which can provide a cushion against market volatility and improve the portfolio's 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.

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The portfolio could be optimized using the Efficient Frontier, which helps find the best risk-return ratio. This approach involves reallocating within the existing assets to achieve maximum returns for a given level of risk. However, optimization is based solely on current assets and allocations, not introducing new ones. By focusing on the Efficient Frontier, you can ensure that your portfolio is performing at its best given the current market conditions. Regularly revisiting this optimization can help maintain an efficient risk-return balance.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Equity ETF 0.90%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • iShares Core S&P Small-Cap ETF 2.10%
  • Invesco S&P 500® Pure Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.84%

The portfolio's total dividend yield is 1.84%, with contributions from various ETFs. Dividend income can provide a steady cash flow, which is beneficial for reinvestment or income needs. Compared to a portfolio with a higher yield, this one may focus more on capital appreciation. For investors seeking income, increasing the allocation to higher-yielding assets could be advantageous. Balancing between growth and income is essential, and adjusting the dividend yield to align with financial goals can optimize the portfolio's performance.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Equity ETF 0.15%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Core S&P Small-Cap ETF 0.06%
  • Invesco S&P 500® Pure Value ETF 0.35%
  • 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) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your investment returns stay in your pocket, enhancing compounding over time. Compared to higher-cost portfolios, this one is well-positioned for cost efficiency. Continuously monitoring and minimizing costs is crucial, as even small differences in fees can significantly impact returns over the long term. Consider reviewing the cost structure periodically to ensure that the portfolio remains cost-effective.

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