A Well-Diversified Growth Portfolio with a Balanced Risk Profile and Strong International Exposure

Report created on Nov 23, 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 three main ETF holdings, with a strong emphasis on equities. The Vanguard Total Stock Market Index Fund ETF Shares holds the largest portion, contributing to 65% of the portfolio, followed by the Vanguard Total International Stock Index Fund ETF Shares at 20%, and the Avantis® U.S. Small Cap Value ETF at 15%. This composition reflects a growth-oriented strategy, with a focus on broad market exposure both domestically and internationally. The diversified nature of these ETFs helps in spreading risk across various sectors and regions, which is crucial for maintaining a balanced portfolio.

Growth Info

Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 15.6%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -36.32%. This suggests that while the portfolio has the potential for high returns, it is also susceptible to market downturns. The concentrated days that make up 90% of returns imply that a few key periods have driven performance, highlighting the importance of staying invested during volatile times.

Projection Info

Using a Monte Carlo simulation, we projected the future performance of the portfolio with a hypothetical initial investment. This method involves running numerous simulations to account for various market conditions. The results indicate a wide range of potential outcomes, with the 50th percentile showing a projected return of 484.83%. The majority of simulations resulted in positive returns, suggesting a favorable outlook. However, it's important to acknowledge the inherent uncertainties and potential for deviation from expected outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, accounting for over 99% of the asset allocation, with negligible amounts in cash and other categories. This allocation aligns with a growth-oriented strategy, aiming to maximize returns through equity investments. However, such a high concentration in stocks increases exposure to market volatility. For those seeking to reduce risk, incorporating other asset classes such as bonds could provide a more balanced risk-return profile.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation within the portfolio is quite diverse, with significant exposure to technology, financial services, and industrials. Technology leads at 23.55%, followed by financial services at 17.21% and industrials at 11.65%. This distribution reflects a strategic focus on sectors with potential for growth and innovation. However, it also means that the portfolio is somewhat reliant on the performance of these sectors. Regularly reviewing sector allocations and adjusting as necessary can help manage sector-specific risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, which makes up over 80% of the allocation. There is also notable exposure to developed markets in Europe and Asia. While this geographic distribution provides some international diversification, it remains heavily skewed towards the U.S. market. To enhance diversification, one might consider increasing exposure to emerging markets or other underrepresented regions to capture growth opportunities outside of North America.

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 currently lies close to the efficient frontier, indicating it is well-optimized for its level of risk. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk. While the portfolio is efficient, there is room for optimization by adjusting the risk level to better align with personal risk tolerance. This could involve rebalancing the portfolio to achieve a more optimal risk-return trade-off, potentially enhancing expected returns without significantly increasing risk.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.67%

The portfolio offers a modest dividend yield of 1.67%, with contributions from all three ETFs. The Vanguard Total International Stock Index Fund ETF Shares provides the highest yield at 3.0%, which enhances the overall income potential. While dividends are not the primary focus of a growth portfolio, they can offer a valuable income stream during periods of market volatility. Investors seeking higher income might consider reallocating to higher-yielding assets, keeping in mind the trade-off between income and growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is relatively low at 0.07%, indicating cost efficiency. The Vanguard ETFs contribute to this low cost, with expense ratios of 0.03% and 0.08%, respectively, while the Avantis® U.S. Small Cap Value ETF has a slightly higher expense ratio of 0.25%. Keeping investment costs low is crucial for maximizing returns over the long term. It's important to maintain awareness of expense ratios, as they can significantly impact net returns, especially in a growth-focused strategy.

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