Highly Diversified Growth Portfolio with Moderate Risk and Strong Historic Performance

Report created on Dec 2, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of four ETFs, with a dominant allocation to the Vanguard Total Stock Market Index Fund ETF Shares, making up 61% of the portfolio. This is complemented by international exposure through the Vanguard Total International Stock Index Fund ETF Shares at 20%, and a focus on small-cap value stocks with the Avantis® U.S. Small Cap Value ETF at 10%. Fixed income is represented by the Vanguard Extended Duration Treasury Index Fund ETF Shares at 9%. This composition suggests a strong tilt towards equities, indicating a growth-oriented strategy.

Growth Info

Historically, the portfolio has delivered a commendable compound annual growth rate (CAGR) of 13.56%. This indicates a robust performance over time, albeit with a maximum drawdown of -31.5%, reflecting periods of volatility. The fact that 90% of returns were concentrated in just 17 days highlights the potential for significant short-term gains. This performance suggests that while the portfolio has been rewarding, it requires a tolerance for market fluctuations and an understanding of the importance of staying invested during volatile periods.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This statistical method provides a range of possible outcomes, with a median (50th percentile) end portfolio value of 172.1%. The simulation shows a 67th percentile outcome of 308.83%, indicating potential for substantial growth. However, a 5th percentile outcome of -41.73% underscores the inherent risk. With 860 simulations yielding positive returns, the annualized return of all simulations is 10.4%, suggesting optimism for future gains, albeit with caution.

Asset classes Info

  • Stocks
    91%
  • Bonds
    9%

The portfolio is heavily weighted towards stocks, comprising 90.56% of the total allocation. Bonds represent 9%, providing a modest buffer against equity market volatility. The minimal allocation to cash and other asset classes suggests a focus on maximizing growth potential. This asset class distribution aligns with a growth-oriented strategy, which typically involves higher risk for the potential of higher returns. To enhance risk management, considering a slight increase in fixed income allocation could provide more stability during market downturns.

Sectors Info

  • Technology
    22%
  • Financials
    15%
  • Industrials
    10%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diverse, with a significant emphasis on Technology (22%) and Financial Services (15.22%). Industrials, Consumer Cyclicals, and Healthcare also hold notable positions, contributing to a well-rounded exposure across various economic segments. This diversification across sectors helps mitigate sector-specific risks and capitalize on different market cycles. While the current allocation is solid, regularly reviewing sector performance and trends can help maintain a balanced approach and ensure alignment with long-term investment objectives.

Regions Info

  • North America
    72%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, which accounts for 72.05% of the allocation. This is complemented by exposure to Europe Developed and various Asian regions, providing a degree of international diversification. While this allocation benefits from the stability and growth of developed markets, it may be worth considering increased exposure to emerging markets for additional growth potential. Balancing geographic exposure can help mitigate regional risks and capitalize on global economic trends.

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 that while the current allocation is efficient, there is room for improvement. Moving along the efficient frontier, one can achieve a riskier or more conservative portfolio by adjusting the equity and bond mix. For a riskier approach, increasing equity exposure could enhance potential returns. Conversely, a more conservative strategy might involve boosting the bond allocation to reduce volatility. Focusing on optimizing the risk-return balance can help align the portfolio with personal financial goals and risk appetite.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 4.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.85%

The portfolio offers a total dividend yield of 1.85%, with notable contributions from the Vanguard Extended Duration Treasury Index Fund ETF Shares at 4.1% and the Vanguard Total International Stock Index Fund ETF Shares at 3%. While dividends provide a steady income stream, the focus remains on capital appreciation. The modest yield aligns with a growth strategy, but for investors seeking more income, exploring higher-yielding options might be beneficial. Balancing growth and income can help achieve a more comprehensive investment approach.

Ongoing product costs Info

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

The portfolio maintains an impressively low total expense ratio (TER) of 0.06%, reflecting efficient cost management. This is primarily due to the low fees associated with the Vanguard ETFs, with the highest being the Avantis® U.S. Small Cap Value ETF at 0.25%. Keeping costs low is crucial for maximizing net returns over time. While the current cost structure is favorable, continuously monitoring and optimizing fees can contribute to better long-term performance. Ensuring that costs remain minimal will help preserve gains and improve overall portfolio efficiency.

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