A growth-oriented portfolio with strong U.S. focus and moderate international exposure

Report created on Jun 1, 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 entirely of ETFs, with a significant focus on U.S. equities. The Vanguard S&P 500 ETF holds the largest weight at 40%, followed by the Invesco NASDAQ 100 ETF at 25%. The remaining funds are diversified across small-cap and international markets. This composition aligns with a growth profile, emphasizing large-cap U.S. stocks while maintaining some exposure to smaller and international markets. Compared to a typical benchmark, the portfolio's heavy U.S. weighting might limit international diversification. Consider balancing U.S. and non-U.S. exposure to enhance global diversification.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 10.42%, reflecting strong past performance. The maximum drawdown of -25.52% highlights potential volatility, typical for growth-oriented portfolios. Days that make up 90% of returns are limited, suggesting that a few days of market movement significantly impact performance. While historical performance can provide insights, it doesn't guarantee future results. Comparing this to a benchmark, such as the S&P 500, can help assess relative performance. Maintaining a long-term perspective is crucial, as short-term volatility may impact returns.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a median return of 157.3% for the portfolio. While 895 out of 1,000 simulations show positive returns, the 5th percentile projects a potential loss of 21.4%. These simulations suggest a wide range of outcomes, emphasizing the inherent uncertainty in predicting future returns. While useful, Monte Carlo analysis doesn't account for future market changes or economic shifts. Regularly reviewing the portfolio and adjusting for market conditions can help manage risk and align with long-term goals.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no exposure to bonds or other asset classes. This 100% equity allocation aligns with a growth strategy, aiming for higher returns at the cost of increased volatility. Compared to a balanced portfolio, this lack of diversification can increase risk during market downturns. Introducing bond or alternative asset classes could help mitigate risk and provide more stable returns. Consider diversifying into other asset classes to enhance risk management and align with a broader investment strategy.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    9%
  • Health Care
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio shows a notable concentration in technology, which comprises 29% of the holdings. Other significant sectors include financial services and consumer cyclicals. This sector allocation mirrors common growth strategies, which often emphasize tech stocks due to their high growth potential. However, tech-heavy portfolios can experience heightened volatility, especially during interest rate fluctuations. Consider diversifying sector exposure to reduce reliance on technology and better align with long-term goals. Balancing exposure across sectors can help manage risk and capitalize on various market opportunities.

Regions Info

  • North America
    85%
  • Europe Developed
    5%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%

Geographic exposure is predominantly in North America, accounting for 85% of the portfolio. This concentration can limit global diversification and increase exposure to U.S. market risks. The remaining geographic allocation is spread across Europe, Asia, and other regions. While this aligns with a U.S.-centric growth strategy, increasing international exposure can help mitigate regional risks and capture global growth opportunities. Consider diversifying geographic exposure to enhance global diversification and reduce reliance on a single market. Balancing U.S. and international investments can improve risk management.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    26%
  • Mid-cap
    15%
  • Small-cap
    13%
  • Micro-cap
    9%

The portfolio's market capitalization is heavily weighted towards mega and big cap stocks, comprising 62% of the allocation. Medium, small, and micro caps make up the remainder. This distribution aligns with a growth strategy, focusing on established companies with strong growth potential. However, a concentration in large-cap stocks may limit exposure to smaller, potentially higher-growth companies. Consider increasing small and mid-cap exposure to enhance growth potential and diversification. Balancing market capitalization can help capture opportunities across different company sizes.

Redundant positions Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    Avantis® International Small Cap Value ETF
    High correlation
  • Invesco NASDAQ 100 ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard FTSE Developed Markets Index Fund ETF and the Avantis® International Small Cap Value ETF, as well as the Invesco NASDAQ 100 ETF and the Vanguard S&P 500 ETF. High correlation can limit diversification benefits, as these assets tend to move together. Reducing overlap by selecting less correlated assets can improve risk management and enhance diversification. Consider revisiting asset selection to minimize overlap and maximize diversification benefits, especially during market downturns.

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.

Optimizing the portfolio using the Efficient Frontier could enhance the risk-return ratio. However, before optimization, addressing the overlap of highly correlated assets is crucial. The Efficient Frontier helps identify the best possible risk-return balance, but it relies on current assets and allocation. Adjusting allocations and reducing overlap can improve portfolio efficiency. Consider revisiting asset selection and allocation to optimize risk and return. Aligning with the Efficient Frontier can enhance portfolio performance and ensure alignment with long-term objectives.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.00%
  • Avantis® Emerging Markets Value ETF 1.00%
  • Avantis® U.S. Small Cap Value ETF 1.80%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.10%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.44%

The portfolio's overall dividend yield is 1.44%, with the highest yield from the Avantis® International Small Cap Value ETF at 4%. Dividends can provide a steady income stream, particularly in volatile markets. However, the focus on growth-oriented ETFs means dividends play a secondary role in returns. For investors seeking income, increasing dividend-focused holdings could enhance yield. Consider balancing growth and income objectives by incorporating higher-yielding assets, if income is a priority. This approach can provide stability and supplement returns during market fluctuations.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) of the portfolio is 0.14%, which is impressively low and supports better long-term performance by reducing costs. The Vanguard S&P 500 ETF has the lowest expense ratio at 0.03%, contributing to overall cost efficiency. Lower costs can significantly impact net returns over time, especially in a growth-focused portfolio. Continuously monitoring and optimizing costs can enhance returns. Consider maintaining low-cost investments to maximize net returns and ensure cost efficiency aligns with investment goals.

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