A balanced growth portfolio with strong U.S. focus and moderate international diversification

Report created on Apr 27, 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 predominantly composed of ETFs, with a significant 40% allocation to the Vanguard S&P 500 ETF. This is complemented by 20% in each of the Avantis U.S. Small Cap Value ETF, Schwab U.S. Large-Cap Growth ETF, and Vanguard Total International Stock Index Fund ETF. This composition leans heavily towards U.S. equities, reflecting a focus on growth with a moderate risk profile. This setup is well-aligned with growth objectives, but the concentration in U.S. markets may limit potential benefits from international diversification. Consider increasing exposure to non-U.S. markets to enhance geographic diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 14.62%, with a maximum drawdown of -35.80%. This indicates strong performance but also highlights vulnerability during market downturns. Compared to benchmarks, the portfolio has outperformed in terms of growth, but the drawdown suggests a need for caution. Historical performance is a useful indicator, yet it's crucial to remember that past results don't guarantee future success. To mitigate potential downturns, consider diversifying further or implementing risk management strategies.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a positive outlook with a median return of 446.6% and an annualized return of 16.00%. The simulation ran 1,000 scenarios, with 975 showing positive returns. While these projections are encouraging, it's important to note that they rely on historical data and assumptions, which may not hold true in the future. Regularly reviewing and adjusting the portfolio based on changing market conditions can help navigate potential uncertainties.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 99% of the total allocation, with a negligible 1% in cash. This strong equity focus aligns with the growth objective, providing potential for high returns, but it also increases exposure to market volatility. Compared to typical benchmarks, this allocation is aggressive and may not suit more risk-averse investors. To balance risk and return, consider incorporating other asset classes, such as bonds or real estate, which can provide stability and income during market fluctuations.

Sectors Info

  • Technology
    26%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is led by technology (26%), followed by financial services (18%), and consumer cyclicals (12%). This sectoral composition is quite balanced, reflecting a diverse range of industries. However, the high concentration in technology could lead to increased volatility, especially during periods of interest rate hikes. Aligning sector weights more closely with broader market indices can enhance diversification. Consider monitoring sector trends and adjusting allocations to maintain a balanced risk profile.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily concentrated in North America (81%), with limited exposure to Europe (8%) and Asia (5%). This U.S.-centric approach may benefit from the stability and growth of the American market but lacks the diversification benefits of a more global allocation. Compared to global benchmarks, this portfolio is under-exposed to emerging markets, which can offer growth potential and risk diversification. To enhance geographic balance, consider increasing allocations to regions like Asia and Europe.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    24%
  • Mid-cap
    13%
  • Small-cap
    11%
  • Micro-cap
    10%

The portfolio is diversified across market capitalizations, with 40% in mega-cap stocks, 24% in big, 13% in medium, 11% in small, and 10% in micro-cap stocks. This mix provides a good balance between stability and growth potential. Mega-cap stocks offer stability, while smaller companies can provide higher growth opportunities. However, the substantial weight in mega-cap stocks may limit exposure to the growth potential of smaller firms. Consider adjusting the allocation to ensure a balanced exposure across different market caps.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, notably the Schwab U.S. Large-Cap Growth ETF and the Vanguard S&P 500 ETF. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, correlated assets may not provide the desired risk reduction. To enhance diversification, consider replacing one of the correlated ETFs with an asset that has a lower correlation to the rest of the portfolio, potentially improving overall risk management.

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 could benefit from optimization using the Efficient Frontier, a concept that helps identify the best possible risk-return ratio based on current assets. By adjusting allocations, it's possible to achieve a more efficient balance between risk and return. This doesn't necessarily mean adding new assets but rather reallocating existing ones to optimize performance. Regularly reviewing the portfolio against the Efficient Frontier can help maintain an optimal balance as market conditions change.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.90%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.66%

The portfolio's overall dividend yield is 1.66%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.10%. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. However, the focus on growth-oriented ETFs means dividends play a secondary role in this portfolio. If income generation is a goal, consider increasing allocations to high-dividend-paying assets to balance growth with income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is a low 0.08%, which is commendable and supports better long-term performance by minimizing costs. Low expenses mean more of your investment returns are retained, enhancing compounding over time. Compared to industry averages, these costs are highly competitive. Maintaining low costs is crucial for maximizing returns, so continue to monitor and assess expense ratios, ensuring they remain favorable as the portfolio evolves.

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