High Growth Portfolio with Broad Diversification and Strong Performance Potential for Risk-Tolerant Investors

Report created on Nov 11, 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 primary ETFs, each representing a different segment of the market. With the Schwab U.S. Large-Cap Growth ETF at 45% and the Avantis U.S. Small Cap Value ETF at 30%, there's a strong emphasis on U.S. equities. The remaining 25% is split equally between developed and emerging markets through Vanguard ETFs. This composition indicates a focus on growth with a broad diversification strategy. Such a structure allows the portfolio to tap into different market dynamics, potentially optimizing returns while managing risk through diversified exposure.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 16.94%, showcasing its ability to generate substantial returns over time. However, it also experienced a significant max drawdown of -36.29%, indicating periods of volatility. The portfolio's returns are concentrated in a few high-return days, with 90% of returns occurring in just 18 days. This highlights the importance of maintaining a long-term perspective and not reacting impulsively to short-term market fluctuations. To maximize the portfolio's potential, maintaining a disciplined investment approach during volatile periods is crucial.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, provides insight into potential future outcomes. With 1,000 simulations, the results show a broad range of possible returns, with the 5th percentile at 20.0% and the 67th percentile at 770.17%. The median outcome stands at 475.12%, suggesting a favorable outlook for the portfolio. With 964 simulations yielding positive returns, the annualized return across all simulations is 16.67%. This analysis reinforces the portfolio's growth potential while emphasizing the importance of understanding that actual outcomes can vary widely.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 99% of the asset allocation. This high equity exposure aligns with the growth-oriented nature of the portfolio, providing opportunities for substantial capital appreciation. However, the lack of diversification across asset classes can increase vulnerability during market downturns. To mitigate risk, consider incorporating a small allocation to bonds or other asset classes, which could provide stability and income during periods of market volatility, while still maintaining a focus on growth.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    14%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    7%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation within the portfolio is well-distributed, with significant exposure to technology, financial services, and consumer cyclicals. Technology leads with over 26%, reflecting the sector's growth potential. While this sectoral distribution offers a balanced approach, it is essential to monitor sector trends and potential overexposure risks. Staying informed about sectoral shifts and economic cycles can help in making strategic adjustments. Diversifying further within sectors could enhance resilience against sector-specific downturns and capitalize on emerging opportunities.

Regions Info

  • North America
    76%
  • Asia Emerging
    7%
  • Europe Developed
    7%
  • Asia Developed
    3%
  • Japan
    3%
  • Latin America
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, which constitutes over 75% of the allocation. This concentration reflects confidence in the U.S. market's growth prospects but also exposes the portfolio to regional risks. While there is some exposure to emerging and developed markets in Asia, Europe, and Latin America, the allocation remains relatively modest. To enhance global diversification and hedge against regional volatility, consider gradually increasing exposure to international markets, ensuring a more balanced geographic distribution.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Weighted yield (per year) 1.33%

The portfolio's dividend yield stands at 1.33%, with contributions from all four ETFs. The Vanguard FTSE Developed Markets Index Fund ETF Shares offers the highest yield at 3.0%, followed by the Vanguard FTSE Emerging Markets Index Fund ETF Shares at 2.6%. Dividends provide a steady income stream, which can be reinvested to enhance the portfolio's growth potential. However, given the portfolio's growth focus, dividends play a secondary role. Regularly reviewing dividend policies and yields can help in making informed decisions about reinvestment or income generation strategies.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio is a low 0.11%, indicating cost-efficiency. The Schwab U.S. Large-Cap Growth ETF has the lowest expense ratio at 0.04%, while the Avantis U.S. Small Cap Value ETF is the highest at 0.25%. Keeping costs low is vital for maximizing net returns over time. Investors should remain vigilant about expense ratios and seek opportunities to reduce costs further. Regularly reviewing and comparing expense ratios across similar funds can help in maintaining a cost-efficient portfolio, ensuring that more of the investment returns are retained.

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