Balanced Growth Portfolio with Strong Diversification and Moderate Risk for Long-Term Gains

Report created on Nov 10, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed predominantly of equities, with a significant allocation to large-cap growth and small-cap value ETFs. It includes a minor allocation to bonds, providing a touch of stability. This blend suggests a growth-oriented strategy, aiming for capital appreciation over time. The inclusion of developed and emerging market ETFs adds international exposure, enhancing diversification. The portfolio's structure is well-suited for investors seeking growth while maintaining a certain level of risk management. To optimize, consider periodically reviewing allocations to ensure alignment with financial goals.

Growth Info

Historically, the portfolio has demonstrated strong performance, with a CAGR of 17.53%. However, it has experienced significant volatility, with a maximum drawdown of -34.04%. This indicates that while the portfolio has provided substantial returns, it has also been subject to considerable fluctuations. Such performance is typical for growth-focused portfolios, which often experience higher volatility in pursuit of greater returns. To manage potential downturns, consider maintaining a long-term perspective and avoiding reactionary decisions during market volatility.

Projection Info

Using a Monte Carlo simulation, the portfolio's future performance was projected with 1,000 simulations. The results showed a median outcome of a 217.14% increase, with a 5th percentile result of -19.74%. This indicates a wide range of potential outcomes, reflecting the inherent uncertainty in financial markets. The high number of simulations with positive returns suggests a favorable outlook for long-term growth. Investors should remain aware of the potential for negative outcomes and consider this when planning for future financial needs.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, making up over 94% of the allocation. Bonds represent a small portion, providing some diversification benefits. This stock-heavy allocation aligns with a growth-oriented strategy, aiming to capitalize on equity market returns. While this can lead to higher potential returns, it also increases exposure to market volatility. To mitigate risk, consider periodically reassessing the balance between equities and bonds, ensuring it aligns with evolving risk tolerance and investment goals.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    7%
  • Health Care
    7%
  • Energy
    6%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is diverse, with significant exposure to technology and financial services, followed by consumer cyclicals and industrials. This sector mix is typical for a growth-focused portfolio, targeting industries with high potential for appreciation. Such diversity reduces the impact of sector-specific downturns on overall performance. Regularly reviewing sector allocations can help maintain diversification and capitalize on emerging opportunities. Consider rebalancing if any sector becomes overly dominant, ensuring the portfolio remains aligned with long-term objectives.

Regions Info

  • North America
    75%
  • Asia Emerging
    6%
  • Europe Developed
    6%
  • Asia Developed
    3%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with some exposure to Asia, Europe, and other regions. This allocation reflects a bias towards the U.S. market, which can offer stability and growth potential. However, the inclusion of international markets provides diversification benefits, reducing reliance on any single economy. To enhance geographic balance, consider periodically reviewing the allocation to ensure it reflects global market opportunities and risks. This approach can help mitigate regional economic 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.

The portfolio's optimization indicates room for improvement by adjusting along the efficient frontier. Investors seeking higher returns may consider increasing equity exposure, particularly in high-growth sectors. Conversely, those desiring lower risk might shift towards bonds, enhancing stability. Before optimizing, ensure the portfolio's current allocation aligns with financial goals and risk tolerance. Focus on maintaining diversification and cost efficiency, as these factors significantly impact long-term performance. Regularly review and adjust allocations as needed to optimize returns within acceptable risk levels.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 4.10%
  • 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 2.70%
  • Weighted yield (per year) 1.40%

The portfolio offers a modest dividend yield of 1.4%, with the highest contributions from the Vanguard Extended Duration Treasury Index and Developed Markets ETFs. Dividends provide a steady income stream, which can be reinvested to compound returns. While growth-focused portfolios typically prioritize capital gains over income, maintaining some dividend-paying assets can enhance total returns. To optimize income, consider monitoring dividend yields and reinvesting payouts consistently, ensuring alignment with financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 0.06%
  • 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 0.11%, indicating low investment costs. This cost efficiency enhances net returns, as lower fees mean more of the portfolio's gains are retained. Keeping investment costs low is crucial for long-term success, as fees can significantly erode returns over time. To maintain cost efficiency, periodically review the expense ratios of holdings and compare them to similar investment options. This vigilance ensures that the portfolio remains cost-effective and aligned with investment objectives.

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