A growth-focused portfolio with high US exposure and moderate sector diversification

Report created on Dec 14, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio primarily consists of three ETFs, with a significant 60% allocation to the Vanguard S&P 500 Growth Index Fund ETF Shares. The remaining 40% is evenly split between the Avantis U.S. Small Cap Value ETF and the Vanguard Total International Stock Index Fund ETF Shares. This composition suggests a strong focus on growth and US equities, with a minor allocation to international stocks. Understanding the balance between growth and value stocks is crucial for managing risk and potential returns. Consider whether this allocation aligns with your risk tolerance and investment goals, and adjust as necessary to ensure it supports your financial objectives.

Growth Info

Historically, this portfolio has shown a robust compound annual growth rate (CAGR) of 17.47%, indicating strong past performance. However, it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -34.55% highlights the potential volatility and risk associated with this portfolio. Such a significant drawdown suggests that while the portfolio can deliver high returns, it can also experience substantial downturns. To manage this risk, consider diversifying further or incorporating more defensive assets to cushion against potential market downturns.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio shows promising results. The projections indicate a 50th percentile return of 570.55%, suggesting a favorable outcome in median scenarios. However, it's important to note that these projections are based on historical data and may not account for future market changes. While the simulations show a high likelihood of positive returns, with 978 out of 1,000 simulations showing gains, it's wise to remain cautious. Regularly reviewing and adjusting your portfolio in response to market conditions can help ensure it remains aligned with your financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.64% of the allocation in equities. This high concentration in a single asset class can lead to increased volatility and risk. While stocks offer the potential for high returns, they can also be subject to significant fluctuations. It's important to consider the implications of such a concentrated allocation and whether it aligns with your risk tolerance. Diversifying into other asset classes, such as bonds or real estate, could help mitigate risk and provide more stable returns over time.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    14%
  • Financials
    13%
  • Industrials
    10%
  • Telecommunications
    9%
  • Health Care
    6%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio's sector allocation shows a strong emphasis on technology, which comprises 34.5% of the holdings. Other significant sectors include consumer cyclicals and financial services. While this concentration in technology may offer high growth potential, it also exposes the portfolio to sector-specific risks. A downturn in the tech industry could significantly impact overall performance. To reduce this risk, consider diversifying into sectors that are less correlated with technology, such as healthcare or utilities, to create a more balanced portfolio.

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 skewed towards North American markets, with 81% of assets allocated there. This concentration provides exposure to a stable and mature market but limits diversification benefits. The remaining allocation is spread across Europe, Asia, and other regions, offering some international exposure. To enhance geographic diversification, consider increasing allocations to emerging markets, which may offer higher growth potential. A more globally diversified portfolio can help mitigate regional risks and provide access to a broader range of investment opportunities.

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 can potentially be optimized using the Efficient Frontier, which seeks to achieve the best possible risk-return ratio. This involves adjusting the allocation of current assets to find the most efficient balance. By optimizing the portfolio, you can potentially enhance returns without increasing risk, or maintain returns while reducing volatility. It's important to note that optimization is based on historical data and current assets, and may not account for future market changes. Regularly reviewing and rebalancing your portfolio can help ensure it remains aligned with your financial objectives and risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.60%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.26%

The portfolio's overall dividend yield is 1.26%, with contributions from all three ETFs. Dividends can provide a steady income stream and help offset some of the portfolio's volatility. While the yield is relatively modest, reinvesting dividends can enhance long-term returns through compounding. If income generation is a priority, consider increasing exposure to higher-yielding assets. However, it's important to balance the pursuit of yield with the potential for growth, as higher yields can sometimes come with increased risk.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.13%

The total expense ratio (TER) for this portfolio is 0.13%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your investment returns are retained, enhancing compounding over time. While the current costs are reasonable, it's always worth reviewing and comparing fees across similar investment options. If lower-cost alternatives are available without sacrificing performance, consider making adjustments. Reducing costs can have a significant impact on your portfolio's net returns, especially over longer investment horizons.

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