Balanced Growth Portfolio with Strong Historical Performance and Moderate Risk Level for Diversified Long-Term Investors

Report created on Jul 3, 2024

Risk profile Info

5/7
Growth
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Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

The portfolio is composed of five ETFs, primarily focusing on U.S. large-cap and small-cap equities, with a significant allocation to international stocks. The largest holding is the Vanguard S&P 500 ETF at 30%, followed by Schwab U.S. Large-Cap Growth ETF at 25%. This allocation supports a growth-oriented approach, providing exposure to diverse markets. With broad diversification across sectors and regions, the portfolio aims to mitigate risk while seeking capital appreciation. To further enhance diversification, consider reviewing the overlap in holdings and potentially introducing more varied asset types.

Growth Info

The portfolio has demonstrated impressive historical performance, with a compound annual growth rate (CAGR) of 17.07%. Despite experiencing a maximum drawdown of -36.06%, the portfolio has shown resilience in recovering from market downturns. The concentrated days of returns indicate that the majority of gains are realized in a small number of trading days, highlighting the importance of maintaining a long-term perspective. To sustain this growth, continue monitoring market trends and adjust allocations as necessary to adapt to changing economic conditions.

Projection Info

Utilizing a Monte Carlo simulation to project future performance, the portfolio shows promising potential. With 1,000 simulations, the median projected return is 593.05%, and 67% of simulations predict a return of 901.75%. The simulation assumes a hypothetical initial investment and provides a range of possible outcomes, emphasizing the importance of diversification in managing risk. While this analysis is not a guarantee, it offers insight into potential future returns. Regularly reassessing the portfolio's composition can help align it with evolving financial goals and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.58% of the total allocation. This stock-centric approach aligns with a growth-oriented strategy, aiming for capital appreciation over time. While this can lead to higher returns, it also introduces increased volatility. To balance risk, consider incorporating a small allocation to bonds or alternative asset classes. This can provide stability and reduce overall portfolio volatility, especially during market downturns. Regularly reviewing asset class distribution ensures alignment with long-term investment objectives and risk tolerance.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    8%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    5%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with significant exposure to technology (26.03%), financial services (16.47%), and consumer cyclicals (12.38%). This diversification across sectors helps reduce risk associated with sector-specific downturns. However, the portfolio is heavily reliant on the technology sector, which can introduce volatility. To enhance stability, consider increasing exposure to more defensive sectors like consumer defensive or utilities. By maintaining a balanced sector allocation, the portfolio can better withstand economic fluctuations and capitalize on sector-specific opportunities.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Japan
    5%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America (76.48%), with additional exposure to Europe, Asia, and other regions. This geographic diversification allows for participation in global economic growth while mitigating region-specific risks. However, the heavy concentration in North America may limit potential gains from emerging markets. To further diversify and capture growth opportunities, consider increasing exposure to underrepresented regions. This can provide a hedge against regional economic downturns and enhance overall portfolio resilience.

Redundant positions Info

  • Vanguard Total International Stock Index Fund ETF Shares
    Avantis® International Small Cap Value ETF
    High correlation
  • Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, such as the Vanguard Total International Stock Index Fund ETF Shares and Avantis® International Small Cap Value ETF. High correlation between assets can reduce diversification benefits and increase portfolio risk. To optimize diversification, consider reducing exposure to overlapping holdings and introducing assets with lower correlations. This can enhance risk-adjusted returns and provide a more balanced investment approach. Regularly assessing correlations helps maintain an effective diversification strategy and aligns the portfolio with long-term financial goals.

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 focusing on reducing overlap in highly correlated assets before pursuing further optimization. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio, depending on individual preferences. To enhance diversification and optimize returns, consider reallocating funds to less correlated assets. This approach can improve risk-adjusted returns and align the portfolio with long-term financial goals. Regularly reviewing and adjusting the portfolio ensures it remains aligned with changing risk tolerance and investment objectives.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.52%

The portfolio's dividend yield stands at 1.52%, with contributions from various ETFs. Notably, the Avantis® International Small Cap Value ETF and Vanguard Total International Stock Index Fund ETF Shares offer higher yields of 3.1% and 3.0%, respectively. While the overall yield is modest, it provides a steady income stream that can be reinvested to compound growth. To enhance income potential, consider exploring additional dividend-focused investments. Balancing growth and income is crucial for achieving long-term financial objectives and maintaining portfolio stability.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • 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 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, reflecting a cost-efficient investment strategy. With low-cost ETFs like the Vanguard S&P 500 ETF at 0.03% and Schwab U.S. Large-Cap Growth ETF at 0.04%, the portfolio minimizes expenses, maximizing net returns. Keeping costs low is essential for optimizing long-term performance. Regularly reviewing and comparing fund expenses ensures continued cost efficiency. Consider replacing higher-cost funds with similar lower-cost alternatives to further enhance portfolio returns without sacrificing diversification or growth potential.

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