Balanced Growth Portfolio with Strong U.S. Focus and Moderate Risk for Long-Term Gains

Report created on Dec 6, 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 four ETFs, with a significant allocation to the Vanguard S&P 500 ETF, making up 40% of the portfolio. The remaining assets are evenly spread across Avantis U.S. Small Cap Value ETF, Invesco QQQ Trust, and Vanguard Total International Stock Index Fund ETF Shares, each holding 20%. This diversified mix provides exposure to large-cap, small-cap, and international equities, ensuring a broad market representation. This composition is relevant as it aligns with a growth-oriented strategy, focusing on capital appreciation. Consider maintaining this diversification to balance potential returns with risk.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 17.37%. However, it also experienced a maximum drawdown of -34.84%, highlighting its vulnerability during market downturns. The performance is reflective of a growth-focused strategy, capturing significant market upswings while being susceptible to volatility. This means that while the portfolio can yield high returns, it may also face steep declines. To manage this, it's crucial to have a long-term investment horizon and be prepared for market fluctuations.

Projection Info

Using a Monte Carlo simulation, which models potential future returns based on historical data, the portfolio shows promising projections. With 1,000 simulations, the median outcome suggests a potential increase of 746.48%, and the annualized return across simulations is 19.3%. This indicates a strong likelihood of positive returns, with 992 simulations showing gains. These projections are helpful for setting realistic expectations about future performance. To optimize potential outcomes, consider maintaining a diversified approach and periodically reviewing the portfolio to ensure alignment with personal risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.6% allocated to this asset class. This high concentration in equities supports a growth-oriented strategy, aiming for capital appreciation. The relevance lies in the potential for higher returns, albeit with increased volatility. While this allocation aligns with a growth profile, consider diversifying into other asset classes like bonds or real estate to manage risk, especially if nearing retirement or requiring more stability.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Telecommunications
    8%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is well-diversified across various sectors, with a notable emphasis on technology, financial services, and consumer cyclicals. This sector allocation captures growth opportunities in dynamic industries, reflecting the portfolio's growth objective. However, it also introduces sector-specific risks, especially if certain industries face downturns. To mitigate these risks, regularly review sector weights and adjust if any sector becomes overly dominant, ensuring a balanced exposure to different economic cycles.

Regions Info

  • North America
    80%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, accounting for 80.4% of the allocation. This concentration leverages the stability and growth potential of U.S. markets. While this focus can drive returns, it also exposes the portfolio to regional risks. To enhance diversification, consider increasing exposure to international markets, which can provide growth opportunities and reduce dependence on any single region. This approach can help balance risks associated with geographic concentration.

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 areas for improvement, particularly in balancing risk and return. Moving along the efficient frontier can help achieve either a riskier or more conservative portfolio, depending on personal preferences. To optimize, consider adjusting asset allocations to enhance diversification or reduce exposure to highly correlated assets. This strategic adjustment can improve the risk-return profile, aligning the portfolio more closely with individual goals and risk tolerance. Focus on maintaining a diversified and cost-effective approach to maximize potential outcomes.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco QQQ Trust 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.48%

The portfolio's overall dividend yield stands at 1.48%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 2.9%. This yield provides a modest income stream, complementing the growth-focused strategy. Dividend income can be a valuable component of total returns, especially during periods of market volatility. To enhance income generation, consider reinvesting dividends or exploring higher-yielding assets, keeping in mind the balance between growth and income objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, which is relatively low, reflecting cost-efficient management. Low costs are crucial as they directly impact net returns. Maintaining a low-cost structure is beneficial for long-term growth, allowing more capital to be invested rather than eroded by fees. To keep costs in check, regularly review the expense ratios of existing and potential investments, ensuring they align with cost-efficiency goals. This focus on minimizing costs can significantly enhance overall portfolio performance.

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