A growth-oriented portfolio with strong S&P 500 exposure and emerging market potential

Report created on Feb 16, 2025

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 five ETFs, with a significant 40% allocation to the SPDR® Portfolio S&P 500 ETF. This large-cap focus is complemented by a 20% stake in emerging markets through the iShares Core MSCI Emerging Markets ETF. Mid-cap and small-cap growth and value ETFs fill out the rest of the portfolio. The composition is well-aligned with a growth strategy, offering broad exposure across different market segments. Compared to a typical benchmark, this portfolio leans towards growth with a moderate tilt towards emerging markets. Consider whether this aligns with your long-term growth objectives and risk tolerance.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 11.60%, indicating strong growth potential. However, it has also experienced significant volatility, with a maximum drawdown of -35.53%. This suggests that while the portfolio can generate impressive returns, it is also subject to substantial fluctuations. When compared to a benchmark, the portfolio's performance is commendable, but it's important to remember that past performance doesn't guarantee future results. To mitigate potential risks, consider diversifying further or adjusting allocations based on your risk tolerance.

Projection Info

A Monte Carlo simulation, which uses historical data to project future outcomes, suggests an annualized return of 12.02% with a wide range of potential outcomes. The 5th percentile projects a -6.3% return, while the 67th percentile anticipates a 446.6% return. This indicates a high degree of uncertainty and potential for both gains and losses. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold in the future. Regularly reviewing your portfolio's projections can help you stay informed and make necessary adjustments.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, with no allocation to bonds, cash, or alternative assets. While this aligns with a growth strategy, it also increases exposure to market volatility. A 100% stock allocation can lead to higher returns but also greater risk, especially during market downturns. In comparison to a diversified benchmark, the lack of fixed income or alternative assets may limit downside protection. Consider whether incorporating bonds or other asset classes could enhance diversification and reduce risk, depending on your investment goals and risk tolerance.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Real Estate
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%

The portfolio exhibits a notable concentration in technology, which accounts for 25% of the total allocation. Financial services and consumer cyclicals also have significant weightings. This sectoral allocation aligns with growth trends but may expose the portfolio to higher volatility, especially if interest rates rise or economic conditions shift. Compared to a benchmark, the sector distribution is somewhat concentrated, which could impact diversification. To manage sector risk, consider balancing exposure across more sectors or adjusting allocations based on market conditions and your risk appetite.

Regions Info

  • North America
    79%
  • Asia Emerging
    10%
  • Asia Developed
    6%
  • Africa/Middle East
    2%
  • Latin America
    2%
  • Europe Developed
    1%

Geographically, the portfolio is heavily weighted towards North America, representing 79% of the allocation, with limited exposure to emerging markets and other regions. This concentration aligns with the portfolio's growth focus but may limit diversification benefits. Compared to a global benchmark, the portfolio's geographic distribution is skewed towards the U.S., which could expose it to regional risks. To enhance geographic diversification, consider increasing exposure to international markets, particularly in Europe and Asia, to potentially reduce U.S.-specific risks.

Market capitalization Info

  • Mega-cap
    29%
  • Mid-cap
    28%
  • Large-cap
    22%
  • Small-cap
    15%
  • Micro-cap
    6%

The portfolio's market capitalization distribution is relatively balanced, with 29% in mega-cap stocks and a significant portion in medium and small caps. This mix provides exposure to both established companies and growth-oriented firms. Compared to a benchmark, the allocation leans slightly towards mid and small caps, which can offer higher growth potential but also increased volatility. To optimize risk and return, consider whether this distribution aligns with your investment goals and risk tolerance. Adjusting the balance between market caps could help achieve a more tailored risk profile.

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 be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio. The current portfolio has room for improvement, with an optimal portfolio offering a higher expected return of 14.11% at the same risk level. This suggests that reallocating within the existing assets could enhance performance. However, it's crucial to consider that optimization focuses solely on risk-return balance and may not address diversification or other goals. Regularly reviewing and adjusting allocations can help achieve a more efficient portfolio tailored to your risk tolerance and objectives.

Dividends Info

  • iShares Core MSCI Emerging Markets ETF 3.00%
  • iShares Core S&P Mid-Cap ETF 1.30%
  • iShares S&P Small-Cap 600 Value ETF 1.30%
  • iShares Morningstar Mid-Cap Growth ETF 0.50%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.48%

The portfolio's dividend yield stands at 1.48%, with contributions from various ETFs, including the iShares Core MSCI Emerging Markets ETF, which offers a 3.00% yield. While dividends provide a steady income stream, the focus on growth-oriented ETFs means the overall yield is modest. For investors seeking income, this may not be sufficient. However, reinvesting dividends can enhance long-term returns. If income generation is a priority, consider incorporating higher-yielding assets or adjusting allocations to achieve a better balance between growth and income.

Ongoing product costs Info

  • iShares Core MSCI Emerging Markets ETF 0.09%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • iShares S&P Small-Cap 600 Value ETF 0.18%
  • iShares Morningstar Mid-Cap Growth ETF 0.06%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, reflecting cost-efficient ETF selections. Low costs are crucial for improving long-term returns, as they minimize the drag on performance. Compared to industry averages, this portfolio's fees are commendably low, supporting better net returns over time. While the current cost structure is advantageous, it's essential to remain vigilant about fee changes or opportunities to further reduce costs. Regularly reviewing expense ratios ensures that the portfolio remains cost-effective and aligned with your financial objectives.

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