Growth-Oriented Portfolio with High U.S. Exposure and Strong Historical Performance

Report created on Jun 9, 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 ETFs: Schwab U.S. Large-Cap ETF (70%), Vanguard Total International Stock Index Fund ETF Shares (20%), and Avantis® U.S. Small Cap Value ETF (10%). This mix provides a broad diversification across large-cap U.S. stocks, international stocks, and U.S. small-cap value stocks. The allocation heavily favors large-cap U.S. equities, which may lead to a concentration risk but also offers stability and growth potential. To enhance diversification, consider balancing the allocation more evenly across different asset classes and regions while maintaining alignment with growth objectives.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 17.11%, indicative of strong past performance. However, it also experienced a significant max drawdown of -35.26%, highlighting the potential volatility associated with a growth-oriented portfolio. The high returns were achieved over just 19 days that made up 90% of the gains, underscoring the importance of staying invested during volatile periods. While past performance is not indicative of future results, maintaining a long-term perspective can help capitalize on potential market rebounds and growth opportunities.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The simulation considered a hypothetical initial investment, with outcomes ranging from a 5th percentile return of 62.48% to a 67th percentile return of 901.31%. The annualized return across all simulations was 17.82%, suggesting a strong potential for future growth. Monte Carlo simulations provide a range of possible outcomes, helping to understand the potential risks and rewards. To optimize for future performance, consider adjusting allocations based on changing market conditions and personal risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, with 99.66% allocated to equities, a small cash position of 0.31%, and negligible amounts in other asset classes. This heavy stock allocation aligns with a growth strategy but also increases exposure to market volatility. Diversifying into other asset classes like bonds or real estate could mitigate risk and provide more stable returns. Given the current allocation, monitoring market trends and adjusting the portfolio to include different asset classes can enhance stability and reduce risk over time.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio spans 11 sectors, with significant exposure to Technology (26.25%), Financial Services (16.44%), and Consumer Cyclicals (11.25%). While this sector distribution offers diversification, the concentration in Technology may increase vulnerability to sector-specific downturns. Balancing sector allocations can help mitigate risks and improve resilience against market fluctuations. Consider periodically reviewing sector performance and adjusting allocations to maintain a balanced approach that aligns with long-term growth objectives and market trends.

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 heavily weighted towards North America, with 80.84% exposure, followed by Europe Developed (8.18%) and Asia Emerging (3.34%). This concentration in North America may limit exposure to growth opportunities in other regions. To achieve a more globally diversified portfolio, consider increasing allocations to emerging markets and other international regions. This can help capture growth potential in diverse markets and reduce the impact of regional economic downturns, enhancing overall portfolio resilience and performance.

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 optimization chart suggests potential for improvement by adjusting along the efficient frontier. To achieve a riskier portfolio, consider increasing allocations to high-volatility assets or sectors. Conversely, for a more conservative approach, shifting towards lower-risk assets or increasing bond exposure can help. While the current portfolio offers a solid foundation, focusing on diversification and cost-efficiency can further enhance performance. Prioritizing these areas ensures alignment with risk tolerance and financial goals, paving the way for a more optimized investment strategy.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap ETF 1.70%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.94%

The portfolio offers a total dividend yield of 1.94%, with individual yields from Avantis® U.S. Small Cap Value ETF at 1.5%, Schwab U.S. Large-Cap ETF at 1.7%, and Vanguard Total International Stock Index Fund ETF Shares at 3.0%. While the yield is moderate, it provides an additional income stream that can enhance total returns. To boost dividend income, consider allocating to higher-yielding assets or reinvesting dividends to increase the compounding effect. Regularly reviewing dividend policies and yields can ensure alignment with income objectives and overall portfolio strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, with individual costs for Avantis® U.S. Small Cap Value ETF at 0.25%, Schwab U.S. Large-Cap ETF at 0.03%, and Vanguard Total International Stock Index Fund ETF Shares at 0.08%. These low costs contribute to maximizing net returns, as high fees can erode gains over time. Maintaining a focus on minimizing investment costs is key to enhancing portfolio performance. Regularly reviewing and comparing expense ratios across similar funds can ensure that the portfolio remains cost-efficient and aligned with financial goals.

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