A growth-focused portfolio with a heavy emphasis on U.S. equities and minimal international exposure

Report created on Jan 19, 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 heavily weighted towards the Vanguard S&P 500 ETF, which constitutes 75% of the holdings. This allocation provides a solid foundation in established U.S. companies. The Vanguard Total International Stock Index Fund ETF Shares and Avantis U.S. Small Cap Value ETF together make up the remaining 25%, offering some diversification. While this composition leans heavily towards U.S. equities, it aligns with a growth-focused strategy. Broad diversification across asset classes is limited, which might expose the portfolio to higher volatility. Balancing the concentration in U.S. equities with more international exposure could enhance diversification and reduce potential risks.

Growth Info

The portfolio has demonstrated a strong historical performance with a Compound Annual Growth Rate (CAGR) of 15.75%. This impressive figure indicates robust growth over time, surpassing many market benchmarks. However, the maximum drawdown of -35.05% highlights significant volatility during market downturns. It's important to remember that past performance doesn't guarantee future results. The portfolio's ability to recover from downturns and capture a majority of its returns on just a few days underscores its growth potential. Maintaining a long-term perspective can help weather short-term fluctuations and capitalize on this growth trajectory.

Projection Info

Monte Carlo simulations, which use historical data to model potential future outcomes, indicate a range of possible returns. With 1,000 simulations, the portfolio shows an annualized return of 15.15%, with a 5th percentile outcome of 20.8% and a 67th percentile of 672.49%. While simulations provide valuable insights, they are not foolproof and assume that past market conditions will continue. The high probability of positive returns (972 out of 1,000 simulations) suggests a favorable outlook, but investors should remain vigilant and adaptable to changing market conditions.

Asset classes Info

  • Stocks
    99%

The portfolio is nearly entirely composed of stocks (99.5%), with negligible allocations to cash and other asset classes. This heavy stock concentration aligns with a growth strategy but limits diversification benefits. Stocks typically offer higher returns over the long term but come with increased volatility. Introducing other asset classes, such as bonds or real estate, could help mitigate risk and provide more stable returns. Diversifying across asset classes can enhance the portfolio's resilience during market downturns and reduce overall volatility.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is heavily tilted towards technology (27.15%), followed by financial services and consumer cyclicals. This concentration in tech could lead to higher volatility, especially during periods of interest rate hikes or regulatory changes. While the sector allocation aligns with growth trends, it may also expose the portfolio to sector-specific risks. Balancing exposure across sectors can help manage risk and capture opportunities in diverse market conditions. Consider evaluating sector trends and adjusting allocations to maintain a balanced approach.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America (85.6%), with limited exposure to other regions. This concentration in the U.S. market aligns with its growth focus but may limit diversification benefits. While the U.S. market has performed well historically, relying heavily on one region can increase vulnerability to local economic downturns. Incorporating more international exposure, particularly in emerging markets, could enhance diversification and capture growth opportunities globally. A more balanced geographic allocation can help mitigate regional risks and improve long-term performance. [nux-report-marketcap] The portfolio's market capitalization exposure is primarily towards large-cap stocks, given the significant allocation to the Vanguard S&P 500 ETF. This focus on large, established companies provides stability and consistent returns. However, the inclusion of the Avantis U.S. Small Cap Value ETF introduces some exposure to smaller companies, which can offer higher growth potential but also increased volatility. Balancing large and small-cap allocations can help optimize growth opportunities while managing risk. Consider evaluating the desired risk-return balance when adjusting market cap exposure.

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 current portfolio composition could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting asset allocations, the portfolio can potentially achieve a more favorable balance between risk and return. Optimization focuses on the existing assets, aiming to enhance efficiency without introducing new investments. This approach can help maximize returns for a given level of risk, aligning with the portfolio's growth objectives. Consider exploring optimization strategies to improve performance while maintaining risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.57%

The portfolio's dividend yield stands at 1.57%, with contributions from all three ETFs. While the yield is modest, dividends can provide a steady income stream and contribute to total returns. For growth-focused investors, dividends may not be the primary objective, but they can enhance portfolio resilience during market volatility. Reinvesting dividends can further compound returns over time. Consider evaluating the role of dividends in achieving investment goals and whether increasing yield is a priority.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is a low 0.06%, reflecting cost-effective management. This low cost structure is beneficial for long-term performance, as it means more of the returns are retained by the investor. Keeping costs low is essential for maximizing net returns, especially in a growth-focused portfolio. Regularly reviewing and minimizing expenses can help improve overall performance. Consider maintaining this cost-efficient approach while evaluating potential changes to the portfolio.

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