A growth-focused portfolio with a strong US equity emphasis and moderate international exposure

Report created on Dec 17, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is primarily composed of US-based equity ETFs, with a significant allocation to the SPDR® Portfolio S&P 500 ETF and Avantis® U.S. Small Cap Value ETF. These two ETFs together make up over 80% of the portfolio, highlighting a strong focus on US equities. A smaller portion is allocated to the Vanguard Total Bond Market Index Fund, providing some fixed-income exposure. Additionally, there is a modest allocation to emerging markets and gold, which can offer diversification benefits. The composition reflects a growth-oriented strategy, aiming to capitalize on the performance of US markets while maintaining some international and asset diversification.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 16.0%. This indicates robust growth over the analyzed period, although past performance does not guarantee future results. The maximum drawdown of -35.95% highlights the potential volatility and risk associated with this portfolio. It's important to remember that historical performance is based on past market conditions, which may not repeat. Investors should consider their risk tolerance and investment goals when evaluating historical returns.

Projection Info

The Monte Carlo simulation, a statistical technique used to model the probability of different outcomes, suggests that the portfolio has a wide range of potential future performances. With 1,000 simulations, the median expected return is 179.47%, while the 5th percentile indicates a potential loss of -32.77%. Although 883 simulations resulted in positive returns, it's crucial to note that these projections are based on historical data and assumptions. They provide a range of possibilities rather than a guarantee, helping investors understand potential risks and rewards.

Asset classes Info

  • Stocks
    91%
  • Bonds
    5%
  • Other
    4%

The portfolio's asset allocation is heavily weighted towards stocks, comprising over 90% of the total allocation. This high equity exposure suggests a focus on growth, but it also increases the portfolio's sensitivity to market fluctuations. The bond allocation is minimal, at just over 5%, which may not provide substantial downside protection during market downturns. The inclusion of gold as an alternative asset class offers some diversification benefits, as it often behaves differently from stocks and bonds. Investors should consider whether this asset allocation aligns with their risk tolerance and investment objectives.

Sectors Info

  • Financials
    20%
  • Technology
    18%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Energy
    8%
  • Telecommunications
    6%
  • Health Care
    6%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is diversified across several sectors, with significant allocations to financial services, technology, and consumer cyclicals. This sectoral distribution reflects a balanced approach, capturing growth opportunities in key industries. However, it also means the portfolio could be susceptible to sector-specific risks, such as regulatory changes in technology or economic downturns affecting consumer spending. Investors should periodically review sector allocations to ensure they remain aligned with their investment strategy and risk tolerance, considering potential adjustments to mitigate concentration risks.

Regions Info

  • North America
    81%
  • Asia Emerging
    7%
  • Asia Developed
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%

The geographic composition is predominantly focused on North America, with over 80% allocated to this region. This concentration suggests a reliance on the performance of the US and Canadian markets. The remaining allocation to emerging markets, particularly in Asia, provides some international diversification, although it remains relatively modest. This geographic focus may expose the portfolio to regional economic and political risks, while also limiting exposure to potential growth opportunities in other parts of the world. Investors might consider increasing international diversification to balance these risks.

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's current asset allocation can be optimized using the Efficient Frontier, a concept in modern portfolio theory that identifies the best possible risk-return ratio. By adjusting the weights of existing assets, the portfolio can potentially achieve higher returns for a given level of risk or lower risk for a given level of return. This optimization process involves analyzing historical data to determine the most efficient allocation. While it doesn't guarantee superior performance, it can help investors make informed decisions about balancing risk and return, enhancing overall portfolio efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • iShares MSCI Emerging Markets ETF 2.40%
  • iShares China Large-Cap ETF 2.30%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.51%

The portfolio's overall dividend yield is modest, at 1.51%, with contributions from various ETFs. The Vanguard Total Bond Market Index Fund provides the highest yield at 3.6%, offering some income stability. Dividend-paying stocks can provide a steady income stream and may offer some downside protection during volatile markets. While the current yield is relatively low, reinvested dividends can contribute to long-term growth. Investors seeking higher income should consider the trade-offs between yield and growth potential, possibly adjusting allocations to balance income needs with growth objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares MSCI Emerging Markets ETF 0.70%
  • iShares China Large-Cap ETF 0.74%
  • SPDR Gold MiniShares 0.10%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low, indicating cost efficiency. Lower costs can enhance long-term returns by reducing the drag on performance. The SPDR® Portfolio S&P 500 ETF and Vanguard Total Bond Market Index Fund have particularly low expense ratios, contributing to the overall cost-effectiveness. However, the iShares Emerging Markets and China ETFs have higher costs, which could impact returns. Investors should regularly review expense ratios and consider lower-cost alternatives if available, ensuring that fees align with their investment strategy and goals.

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