A value tilted equity only portfolio with strong US bias and surprisingly moderate historical drawdowns

Report created on Aug 28, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is 100% in stocks, built entirely with ETFs, and leans heavily on one broad US core holding plus a set of value and small cap tilts. With a risk score of 4/7 and “balanced” classification, it sits in the middle of the risk spectrum despite being all equity, helped by diversification across many holdings. This structure matters because the core ETF behaves like a market backbone, while the other funds push the mix toward specific styles. Keeping a strong core and using a limited number of focused “satellite” tilts can keep things simpler. Trimming overlapping satellites can maintain the tilt while reducing redundancy and complexity.

Growth Info

Historically the portfolio shows a compound annual growth rate (CAGR) of 15.79%, meaning a theoretical $10,000 could have grown to around $41,800 over ten years if that rate persisted. The max drawdown of roughly -17.8% is relatively mild for a 100% stock mix, suggesting past drops were painful but not extreme versus typical equity bear markets. This balance of strong growth and manageable past declines is a clear positive and indicates the structure has worked well so far. Still, past numbers only describe what happened under previous conditions. Using them as one input rather than a guarantee helps keep expectations realistic during future rough patches.

Projection Info

The Monte Carlo analysis, which runs 1,000 random “what if” paths using historical patterns, shows a median outcome of about 709% of starting value and a 5th percentile of about 147%. Monte Carlo is like simulating many alternate market histories to see a range of possibilities, not a precise prediction. The annualized return of 17.51% across simulations is impressive, but it’s inflated by a very strong backtest period and assumes similar future dynamics. Treat these projections as a rough map of possible ranges rather than a promise. Using the lower-end outcomes for planning can encourage more conservative expectations and better risk management.

Asset classes Info

  • Stocks
    100%

All assets in this lineup are stocks, with no bonds, cash, or alternatives above 2%. That’s a big reason the profile still carries meaningful risk despite the “balanced” label. A 100% equity allocation is powerful for long-term growth but can be uncomfortable in deep bear markets when everything moves down together. On the plus side, your equity slice is broadly diversified across many underlying companies and regions, which supports resilience within the stock bucket. If steadier short‑term behavior is ever a goal, shifting a slice into less volatile asset types could smooth the ride, though at the cost of some expected long‑run return.

Sectors Info

  • Technology
    22%
  • Financials
    18%
  • Consumer Discretionary
    14%
  • Industrials
    12%
  • Telecommunications
    7%
  • Energy
    7%
  • Basic Materials
    6%
  • Health Care
    6%
  • Consumer Staples
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector exposure is nicely spread: technology, financials, consumer cyclicals, and industrials are the biggest, with the rest reasonably represented. This composition is broadly in line with major global equity benchmarks, which is a strong indicator of healthy diversification. Tech at 22% is meaningful but not extreme, so the portfolio should benefit from innovation trends without being fully at the mercy of rate‑sensitive growth mania. Value tilts inject more exposure to financials, energy, and basic materials, which often behave differently from expensive growth names. Keeping an eye on whether any one sector drifts far above benchmark weights over time can help avoid concentration risks sneaking in.

Regions Info

  • North America
    74%
  • Europe Developed
    7%
  • Asia Emerging
    6%
  • Japan
    4%
  • Asia Developed
    4%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%

Geographically, about 74% of the portfolio sits in North America, mostly the US, with the rest spread across developed ex‑US and emerging markets. That US tilt is typical for American investors and has been rewarded over the last decade as US stocks outperformed many peers. The exposure to emerging markets and developed international small caps is a big plus, adding diversification that many portfolios lack. However, the US share is still dominant, so big US market downturns would strongly affect overall results. Over time, modestly adjusting the split between domestic and foreign holdings can keep global exposure intentional rather than just drifting with past winners.

Market capitalization Info

  • Mega-cap
    27%
  • Mid-cap
    23%
  • Large-cap
    22%
  • Small-cap
    17%
  • Micro-cap
    10%

The market cap mix is unusually balanced: mega 27%, big 22%, mid 23%, small 17%, and micro 10%. This clearly pushes beyond a plain large‑cap index and introduces meaningful exposure to smaller, often more volatile but higher‑expected‑return companies. That tilt is a key driver behind the strong backtested performance and is well‑aligned with factor investing research. However, smaller companies can suffer deeper drawdowns and slower recoveries in some cycles. Keeping this tilt is perfectly reasonable for long horizons, but it’s useful to remember that returns may look bumpier than a pure large‑cap index, especially during recessions or liquidity crunches when small caps can get hit harder.

Redundant positions Info

  • Avantis® International Small Cap Value ETF
    Dimensional ETF Trust - Dimensional International Small Cap Value ETF
    High correlation
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF
    Avantis® Emerging Markets Value ETF
    High correlation
  • WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund
    American Century ETF Trust - Avantis U.S. Large Cap Value ETF
    High correlation
  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

Several pairs of holdings are highly correlated, meaning they tend to move in very similar ways. Correlation is basically a “dance score” from -1 to +1 showing how often assets move together; high positive numbers mean they usually go the same direction. The twin pairs in international small value, emerging markets value, US quality/value, and US large growth all suggest some redundancy. This limits the diversification benefit you think you’re getting from the number of tickers. You could keep the same general style and regional exposures with fewer overlapping funds, simplifying rebalancing and slightly reducing costs while maintaining the overall investment philosophy.

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.

From a risk versus return perspective, this portfolio looks close to the “efficient frontier” for an all‑equity, factor‑tilted mix. The efficient frontier is the curve of portfolios that offer the best expected return for each level of volatility when only weights, not holdings, change. Given the many highly correlated pairs, there’s room to streamline by removing some overlap while keeping the same broad exposures. That could push the portfolio slightly closer to efficiency by trimming redundancies and marginal costs. It’s worth remembering that an “efficient” portfolio is not automatically the most diversified or emotionally comfortable one; it simply balances risk and return as cleanly as the current building blocks allow.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.30%
  • Avantis® Emerging Markets Value ETF 3.70%
  • American Century ETF Trust - Avantis U.S. Large Cap Value ETF 1.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 2.80%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 2.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.10%
  • WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund 1.40%
  • Weighted yield (per year) 1.74%

The portfolio’s total dividend yield of about 1.74% is modest but a bit higher than a pure US large‑cap growth mix, thanks to value and international holdings. Yield here acts as a small “paycheck” component but is not the main return driver; growth and factor tilts dominate. For investors who care about cash flow, this level is more of a helpful supplement than a primary income source. Value and emerging markets funds show higher yields, which can offer some cushion in sideways markets. If dependable income becomes a bigger priority later, gradually leaning more toward higher‑yielding strategies could increase cash flow without overhauling the philosophy.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • American Century ETF Trust - Avantis U.S. Large Cap Value ETF 0.15%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 0.43%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 0.42%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund 0.12%
  • Weighted costs total (per year) 0.17%

The total expense ratio (TER) of roughly 0.17% is impressively low for such a factor‑tilted, globally diversified setup. Costs matter because they come off returns every year regardless of market performance, and the difference between 0.2% and 0.8% compounds significantly over decades. Here, the ultra‑cheap core ETFs offset the pricier factor and emerging markets funds, striking a very reasonable balance. This cost profile strongly supports better long‑term performance and compares favorably to most actively managed or advisor‑packaged portfolios. Further cost cuts would likely come from consolidating overlapping high‑correlation funds rather than chasing a few basis points in isolation.

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