A growth-focused portfolio with broad diversification and a strong emphasis on US equities

Report created on Dec 7, 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 heavily weighted towards equities, with 75% invested in the Vanguard Total Stock Market Index Fund ETF Shares, 15% in the Vanguard Total International Stock Index Fund ETF Shares, and 10% in the Avantis® U.S. Small Cap Value ETF. This composition suggests a focus on growth, with a strong tilt towards the US market. Having a significant portion in international stocks adds a layer of diversification. The inclusion of small cap value stocks aims to capture potential higher returns over time. A high equity allocation typically indicates a higher risk profile, suitable for long-term investors.

Growth Info

Historically, this portfolio has demonstrated strong performance, with a compound annual growth rate (CAGR) of 16.09%. However, it has also experienced significant volatility, as evidenced by a maximum drawdown of -35.8%. This means that while the portfolio has the potential for high returns, it can also experience substantial declines during market downturns. Investors should be prepared for such fluctuations and ensure they have a long-term perspective. It's important to remember that past performance does not guarantee future results, as market conditions can change.

Projection Info

The portfolio's future performance was projected using a Monte Carlo simulation, which ran 1,000 different scenarios based on historical data. This method helps estimate potential outcomes by accounting for market variability. The results show a wide range of potential returns, with a 5th percentile outcome of 39.12% and a 67th percentile of 735.12%. While the median scenario suggests a robust return of 462.9%, it's crucial to understand that these projections are not predictions. They serve as a guide to potential risks and rewards, highlighting the importance of being prepared for various market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for over 99% of the allocation. This heavy equity focus aligns with a growth-oriented strategy but also elevates risk levels. While stocks typically offer higher long-term returns compared to other asset classes, they also come with increased volatility. A small cash position provides some liquidity but does little to mitigate risk. Investors might consider diversifying into other asset classes, such as bonds or real estate, to balance risk and return, especially if their risk tolerance changes over time.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector-wise, the portfolio is diversified across multiple industries, with the largest allocations in technology, financial services, and consumer cyclicals. Technology, at over 25%, is a significant driver of growth but can also introduce volatility due to its inherent risk factors. The balance across sectors helps mitigate sector-specific risks, but investors should be aware of potential overexposure to any single sector. Regularly reviewing and adjusting sector allocations can help maintain a balanced risk profile, ensuring that the portfolio remains aligned with the investor's goals and market conditions.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily skewed towards North America, which makes up over 85% of the allocation. While this reflects a strong home bias, it also exposes the portfolio to regional risks. The remaining allocation is spread across developed and emerging markets, providing some international diversification. However, the limited exposure to non-North American markets may miss opportunities for growth in other regions. Investors might consider increasing their exposure to diverse geographic areas to enhance diversification and potentially capture growth in global markets.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset allocations. This approach doesn't necessarily change the portfolio's composition but reallocates existing assets to achieve more efficient outcomes. By optimizing, investors might improve returns without significantly increasing risk. However, it's important to note that optimization relies on historical data and assumptions, which may not always predict future market conditions. Regular re-evaluation and adjustments based on current market trends and personal financial goals are recommended to maintain portfolio efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.48%

The portfolio offers a modest dividend yield of 1.48%, with contributions from the Avantis® U.S. Small Cap Value ETF, Vanguard Total Stock Market Index Fund ETF Shares, and Vanguard Total International Stock Index Fund ETF Shares. While dividends can provide a steady income stream, the primary focus of this portfolio is growth. Investors seeking higher income might need to explore other income-generating assets. However, reinvesting dividends can enhance long-term growth, compounding returns over time. It's essential to balance income needs with growth objectives, ensuring the portfolio supports the investor's overall financial goals.

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) 0.06%

With a total expense ratio (TER) of 0.06%, the portfolio is cost-effective, minimizing the impact of fees on returns. Lower costs can significantly enhance long-term performance, as fees compound over time. The Avantis® U.S. Small Cap Value ETF has the highest expense ratio at 0.25%, while the Vanguard funds are notably lower. Investors should regularly review their investment costs and consider alternatives if fees become burdensome. Maintaining a low-cost portfolio is crucial for maximizing net returns, ensuring that more of the portfolio's growth benefits the investor.

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