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

Report created on Dec 20, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 60% in the Vanguard S&P 500 ETF and 15% in the Avantis U.S. Small Cap Value ETF. It also includes 15% in the Vanguard FTSE Emerging Markets ETF and 10% in the Vanguard Total Bond Market ETF. The composition indicates a growth-oriented strategy, with a significant emphasis on US large-cap equities. Compared to a typical growth portfolio, this allocation is quite standard, suggesting a balanced approach to capturing growth while managing risk. To enhance diversification, consider increasing exposure to international equities or alternative asset classes.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.86%. This indicates robust growth over the evaluated period, outperforming many standard benchmarks. However, the maximum drawdown of -32.22% highlights the potential for significant short-term losses. Understanding past performance helps set realistic expectations, but remember that it doesn't guarantee future results. To mitigate potential losses, consider strategies like rebalancing or employing stop-loss orders to protect gains while maintaining growth potential.

Projection Info

Monte Carlo simulations, using historical data, suggest an annualized return of 10.93% for this portfolio. The 5th percentile shows a potential loss of -13.76%, while the 67th percentile projects gains up to 365.63%. These simulations provide a range of potential outcomes, helping investors understand the variability in returns. However, it's crucial to note that these projections are based on past data and may not predict future performance accurately. Regularly reviewing and adjusting the portfolio can help navigate future uncertainties and align with changing market conditions.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The portfolio is predominantly composed of stocks (89.47%) and bonds (9.85%), with minimal allocations to other asset classes. This heavy stock allocation aligns with a growth strategy, as equities typically offer higher returns over the long term compared to bonds. However, the limited bond exposure may increase volatility. To enhance stability, consider diversifying into other asset classes such as real estate or commodities, which can provide additional risk mitigation and potential return opportunities.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is led by technology (23.82%), followed by financial services (15.27%) and consumer cyclicals (10.44%). This composition reflects a focus on sectors with strong growth potential, but it also implies higher volatility, especially during economic downturns or interest rate changes. A well-diversified sector allocation can help mitigate these risks. Consider reassessing sector weights to ensure they align with market trends and your risk tolerance, potentially reducing concentration in highly volatile sectors.

Regions Info

  • North America
    74%
  • Asia Emerging
    9%
  • Asia Developed
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%

The portfolio is primarily focused on North America (74.37%), with smaller allocations to emerging and developed markets in Asia and other regions. This geographic concentration may limit exposure to growth opportunities in other parts of the world. Diversifying geographically can reduce regional risk and capture growth in different economic cycles. Consider increasing exposure to underrepresented regions to enhance diversification and tap into emerging market growth potential, while keeping an eye on geopolitical risks.

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 current asset allocation appears well-positioned on the Efficient Frontier, suggesting an optimal risk-return balance for the given assets. This means the portfolio is structured to achieve the best possible return for its level of risk. However, optimization is based solely on the current assets and their allocations. Regularly reviewing and adjusting the portfolio to reflect changes in market conditions and personal investment goals can ensure it remains efficient and aligned with your financial objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.80%
  • Weighted yield (per year) 1.26%

The portfolio yields a modest total dividend of 1.26%, with the Vanguard Total Bond Market ETF contributing the highest yield at 3.6%. While dividends provide a steady income stream, they form a smaller part of this growth-focused portfolio's returns. For investors seeking income, increasing dividend-paying assets could be beneficial. However, for growth-oriented investors, reinvesting dividends could enhance compounding returns. Regularly reviewing dividend policies and yields can ensure they align with your financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The total expense ratio (TER) of this portfolio is impressively low at 0.07%, which is beneficial for long-term performance. Lower costs mean more of your investment returns are retained. The Vanguard ETFs contribute to this cost efficiency with TERs as low as 0.03%. While the Avantis ETF has a slightly higher cost, it remains competitive. Continually monitoring and evaluating investment costs can help maintain a cost-effective portfolio, potentially replacing higher-cost assets with lower-cost alternatives.

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