Balanced Growth Portfolio with Broad Diversification and Strong Historical Performance for Moderate Risk Tolerance

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits investors who have a moderate to high-risk tolerance and a focus on long-term growth. Such investors are often comfortable with market volatility in pursuit of higher returns. Their investment horizon typically spans several years, allowing them to ride out market fluctuations. The goal is to achieve significant capital appreciation by leveraging diversified market exposure while accepting the inherent risks of equity investments. This investor type values both growth potential and the benefits of a broadly diversified portfolio.

Positions

  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    45.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    30.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    12.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    12.50%

The portfolio is composed of four ETFs, with a substantial allocation towards Schwab U.S. Large-Cap Growth ETF at 45% and Avantis U.S. Small Cap Value ETF at 30%. The Vanguard FTSE Developed and Emerging Markets Index Funds together make up the remaining 25%. This allocation leans heavily towards U.S. equities, with a slight international exposure. Such a structure provides a solid foundation for growth, yet remains diversified across different market caps and geographies. The portfolio's composition is well-suited for those seeking growth with managed risk through diversification.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a CAGR of 18.1%. This suggests robust growth over time, albeit with a notable max drawdown of -36.29%, indicating potential volatility. The returns are concentrated, with just 18 days accounting for 90% of the gains, highlighting the importance of staying invested. This performance profile indicates that the portfolio has capitalized on market upswings effectively. To maintain such performance, it’s crucial to stay aligned with the growth objectives while being prepared for market fluctuations.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, the portfolio shows a median projected growth of 433.77% with a positive return in 956 simulations. The annualized return across simulations is 15.65%, suggesting promising future potential. Monte Carlo simulations provide a range of possible outcomes, offering insights into potential risks and rewards. This projection indicates a strong likelihood of continued growth, aligning with the portfolio’s current strategy. However, it's important to regularly reassess risk tolerance and market conditions to ensure alignment with long-term goals.

Asset classes

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is predominantly invested in stocks, accounting for over 99% of the allocation, with minimal cash and other holdings. This heavy equity focus is typical for a growth-oriented portfolio, offering the potential for higher returns but also increased volatility. While this allocation supports long-term growth, it’s essential to regularly evaluate whether this level of equity exposure aligns with personal risk tolerance. If market conditions change or risk preferences shift, consider diversifying into other asset classes like bonds to manage risk.

Sectors

  • Technology
    27%
  • Financials
    17%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    6%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation shows a strong emphasis on technology at 27%, followed by financial services and consumer cyclicals. This sector distribution reflects a growth strategy, capitalizing on the potential of high-performing industries. However, such concentration can introduce sector-specific risks. To mitigate this, it's crucial to monitor sector performance and ensure that the portfolio remains aligned with broader market trends. Diversifying further across sectors can help reduce exposure to any single industry, enhancing overall stability.

Regions

  • North America
    76%
  • Asia Emerging
    8%
  • Europe Developed
    7%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%
  • Europe Emerging
    0%

Geographically, the portfolio has a significant focus on North America, comprising over 75% of the allocation. There is some exposure to emerging and developed markets in Asia and Europe, but these regions are less represented. This U.S.-centric approach aligns with the growth profile, benefiting from the stability and potential of the U.S. market. Nonetheless, it's important to consider global diversification to capture opportunities in other regions and hedge against regional economic downturns. Regularly reviewing geographic allocation can ensure a balanced global exposure.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • 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) 1.34%

The portfolio yields an overall dividend of 1.34%, with the Vanguard FTSE Developed Markets Index Fund ETF offering the highest yield at 3%. Dividends provide a steady income stream, which can be reinvested to enhance growth. While the yield is modest, it complements the growth strategy by adding a layer of income stability. Monitoring dividend payments and yields is crucial, as they can indicate the financial health of the underlying investments. Consider reinvesting dividends to maximize compounding benefits over time.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • 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 (TER) is 0.11%, which is relatively low and beneficial for long-term growth. Lower costs mean more of the returns are retained, enhancing overall performance. The Schwab U.S. Large-Cap Growth ETF has the lowest cost at 0.04%, contributing to the efficiency of the portfolio. Keeping investment costs low is a fundamental principle, as high fees can erode returns over time. Regularly reviewing and optimizing the cost structure can ensure that the portfolio remains cost-effective and aligned with financial goals.

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.

The portfolio is efficient but not optimal, lying close to the efficient frontier. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk. While the current portfolio performs well, there is room for optimization to achieve an expected return of 22% with a risk level of 24.51%. Regularly revisiting the risk-return profile and considering adjustments in line with personal risk preferences can help in optimizing the portfolio further. This ensures alignment with evolving financial goals and market conditions.

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