A growth-focused portfolio with strong U.S. bias and moderate diversification

Report created on Mar 6, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted toward equities, with a significant 50% allocation to the Vanguard S&P 500 ETF. This structure leans towards large-cap U.S. equities, reflecting a growth-oriented approach. The inclusion of the Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Growth ETF further emphasizes a focus on U.S. stocks, while the Avantis International Small Cap Value ETF and Vanguard FTSE All-World ex-US Index Fund add some international exposure. Compared to a typical balanced portfolio, this one is less diversified across asset classes, lacking bonds or alternative investments. To enhance diversification, consider incorporating fixed-income or alternative asset classes, which could provide stability during market volatility.

Growth Info

Historically, the portfolio has demonstrated robust performance, with a Compound Annual Growth Rate (CAGR) of 15.20%. This is a strong return, especially when compared to typical benchmark indices. However, the portfolio also experienced a maximum drawdown of -34.04%, indicating potential vulnerability during market downturns. While past performance is not a guarantee of future results, the historical data suggests a high potential for growth alongside significant risk. To mitigate potential future drawdowns, consider diversifying across asset classes or regions to balance the risk-return profile.

Projection Info

A Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns, with a 5th percentile outcome of 57.8% and a 67th percentile outcome of 710.7%. The median projection is an impressive 479.5% return. While the simulation shows a high likelihood of positive returns, it's essential to remember that these projections are based on historical data and assumptions that may not hold in the future. To prepare for various scenarios, regularly review and adjust the portfolio in response to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can provide high growth potential but also increase volatility. This 100% equity allocation aligns with a growth-focused strategy but lacks the diversification benefits that other asset classes, like bonds or real estate, can provide. In comparison to a benchmark with a mix of asset classes, this portfolio may experience higher volatility. To reduce risk, consider introducing a small percentage of fixed-income securities, which can act as a buffer during market downturns.

Sectors Info

  • Technology
    27%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily concentrated in the technology sector, accounting for 27% of the allocation. This is significantly higher than typical benchmark indices, suggesting a potential for higher returns but also increased volatility, especially during periods of interest rate changes. Other sectors like financial services and consumer cyclicals are also well-represented, providing some balance. However, sectors such as utilities and real estate are underrepresented. To mitigate sector-specific risks, consider rebalancing to achieve a more even distribution across sectors.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    5%
  • Asia Emerging
    2%
  • Australasia
    1%
  • Asia Developed
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio has a strong bias towards North America, with 81% of assets invested in this region. This concentration may limit exposure to growth opportunities in other regions, such as emerging markets. While the U.S. market has performed well historically, diversification across geographies can reduce region-specific risks and capture international growth potential. Consider increasing exposure to underrepresented regions like Asia or Europe to enhance global diversification and reduce reliance on the U.S. market.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    33%
  • Mid-cap
    22%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 72% allocated to mega and big-cap companies. This focus offers stability and lower volatility compared to small-cap stocks but may limit growth potential. Small-cap and micro-cap stocks, which make up only 6% of the portfolio, can offer higher growth prospects albeit with increased risk. To achieve a balanced risk-return profile, consider slightly increasing the allocation to small and mid-cap stocks, which can provide diversification and potential for higher returns.

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 identifies the best possible risk-return ratio based on current assets. This involves adjusting asset allocations to maximize returns for a given level of risk. The current portfolio is growth-focused, but there may be opportunities to enhance returns or reduce risk through rebalancing. Regularly review the portfolio to ensure it remains aligned with personal risk tolerance and financial goals, making adjustments as necessary to maintain optimal performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.00%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.74%

The portfolio's dividend yield stands at 1.74%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 3.50%. Dividends can provide a steady income stream, which is beneficial for reinvestment or income generation. While the yield is modest, it complements the growth-focused strategy by adding a defensive element. For investors seeking higher income, consider increasing the allocation to dividend-focused investments. However, ensure that this aligns with the overall growth objectives of the portfolio.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, which is beneficial for long-term performance. Low costs mean more of the investment returns are retained by the investor, enhancing compounding over time. Each ETF within the portfolio has a competitive fee structure, with the Vanguard S&P 500 ETF having the lowest at 0.03%. Maintaining a low-cost portfolio is a positive strategy, but it's essential to ensure that cost savings do not come at the expense of diversification or potential returns.

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