Growth-Oriented Broadly Diversified Portfolio with Strong Historical Performance and Moderate Risk Profile

Report created on Dec 5, 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 entirely of ETFs, with a strong emphasis on equities. The Vanguard S&P 500 ETF is the largest holding at 45%, followed by the Vanguard Total International Stock Index Fund ETF at 25%. This indicates a preference for broad market exposure, both domestically and internationally. The inclusion of the Avantis International Small Cap Value ETF and the Fidelity MSCI Information Technology Index ETF adds diversity and a tilt towards value and tech sectors. This composition suggests a focus on capital growth through diversified equity exposure, which is well-aligned with a growth-oriented investment strategy.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 14.7%. This suggests strong returns over time, although it's important to note the maximum drawdown of -34.96%, highlighting the potential for significant volatility. The fact that 90% of returns are concentrated in just 16 days underscores the importance of staying invested to capture gains. While past performance doesn't guarantee future results, this historical data suggests the portfolio has been effective in achieving growth, but investors should be prepared for potential fluctuations in value.

Projection Info

A Monte Carlo simulation, which uses statistical modeling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the simulation shows a median return of 589.17%, with the top third of simulations reaching 929.52%. The 5th percentile return is 80.06%, indicating a wide range of possible outcomes. This suggests a potential for substantial growth, but also highlights the uncertainty and variability inherent in investing. Investors should be prepared for a range of scenarios, understanding that while the potential for high returns exists, there is also risk involved.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99.33% of assets in equities. Minimal exposure to cash, bonds, or other asset classes suggests a high-risk, high-reward strategy focused on capital appreciation. While this allocation can drive significant growth, it also increases vulnerability to market fluctuations. Diversifying into other asset classes could help reduce risk and provide more stability. However, given the portfolio's growth focus, maintaining a high equity allocation may be appropriate. Investors should consider their risk tolerance and investment horizon when evaluating this allocation.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    8%
  • Basic Materials
    6%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    5%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with technology leading at 28.78%. Financial services, industrials, and consumer cyclicals also hold significant portions. This distribution reflects a broad exposure to various economic sectors, which can help mitigate sector-specific risks. However, the heavy weighting in technology could lead to increased volatility, given the sector's tendency for rapid changes. A more balanced sector allocation might reduce risk, but the current setup aligns with a growth-oriented strategy. Investors should regularly review sector performance and adjust allocations to maintain a balanced risk profile.

Regions Info

  • North America
    59%
  • Europe Developed
    18%
  • Japan
    10%
  • Asia Emerging
    4%
  • Australasia
    3%
  • Asia Developed
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, making up 58.88% of the allocation. Europe Developed and Japan follow, with smaller allocations in emerging markets. This indicates a preference for developed markets, which typically offer stability and established growth opportunities. The limited exposure to emerging markets suggests a more conservative approach to geographic diversification. To enhance growth potential, investors might consider increasing exposure to high-growth regions. However, the current allocation aligns with a strategy focused on stable, long-term growth from established economies.

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 improvements by adjusting along the efficient frontier. By rebalancing, investors can achieve a more risk-efficient portfolio. Moving towards a riskier profile might involve increasing equity exposure, while a more conservative approach could include adding bonds or cash. However, given the current broadly diversified setup, focusing first on maintaining the existing balance and ensuring alignment with personal risk tolerance and financial goals is essential before making significant changes.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.92%

The portfolio's dividend yield stands at 1.92%, with contributions from all ETFs, led by the Avantis International Small Cap Value ETF at 3.0%. This yield provides a modest income stream, complementing the growth focus of the portfolio. While not a primary income source, dividends can offer a buffer during market downturns. Investors seeking higher income might consider increasing allocations to higher-yielding assets. However, the current dividend strategy supports the portfolio's growth objectives by reinvesting income to enhance long-term returns.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The total expense ratio (TER) for the portfolio is 0.11%, indicating low costs relative to many actively managed funds. This cost efficiency supports better net returns over time, as lower fees mean more of the portfolio's gains are retained. The low costs are consistent across all ETFs, with the Vanguard S&P 500 ETF being particularly cost-effective at 0.03%. Keeping investment costs low is crucial for maximizing returns, especially in a growth-focused portfolio. Regularly reviewing and optimizing costs can further enhance performance.

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