A growth-focused portfolio with strong global exposure and moderate sector diversification

Report created on Jan 12, 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 in equities, with 70% in the Vanguard Total World Stock Index Fund ETF Shares, 15% in the Avantis® U.S. Small Cap Value ETF, and 15% in the Vanguard S&P 500 ETF. This composition leans towards a growth-oriented strategy, favoring global and U.S. markets. Compared to a typical balanced portfolio, this allocation is more aggressive, focusing less on bonds or other asset classes. To enhance diversification, consider incorporating different asset types, such as bonds or real estate, to mitigate risks associated with a purely equity-based portfolio.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.83%, indicating robust growth over time. Despite a significant maximum drawdown of -36.04%, the portfolio's performance has been impressive, especially when compared to standard benchmarks like the S&P 500. This historical trend underscores the portfolio's potential for high returns, although it also highlights the risk of volatility. It's important to remember that past performance doesn't guarantee future results, so maintaining a diversified strategy is key to managing potential downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, suggests promising prospects for the portfolio. With a 50th percentile projection of 513.13% and a majority of simulations showing positive returns, the outlook is optimistic. However, it's crucial to note that these projections are based on past data, which may not account for future market conditions. To prepare for uncertainties, consider periodically reviewing and adjusting the portfolio to align with changing market dynamics and personal goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly composed of stocks, making up over 99% of the allocation. This heavy tilt towards equities implies a strong focus on capital appreciation, aligning with a growth profile. While this can lead to higher returns, it also increases exposure to market volatility. To achieve better risk-adjusted returns, incorporating a mix of asset classes, such as fixed income or alternative investments, could provide a buffer during market downturns and contribute to a more balanced risk profile.

Sectors Info

  • Technology
    23%
  • Financials
    18%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation is diverse, with significant exposure to technology (23.14%), financial services (17.58%), and industrials (11.55%). This distribution is well-aligned with global benchmarks, offering a balanced approach across various economic sectors. However, the high concentration in technology may lead to increased volatility, especially during periods of interest rate changes or economic shifts. To mitigate sector-specific risks, consider periodically rebalancing to ensure no single sector dominates the portfolio, maintaining a diversified stance.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

With 75.62% of the portfolio allocated to North America, there's a notable home bias, which is common among U.S. investors. While this provides exposure to a stable and mature market, it limits potential gains from emerging markets and other regions. To enhance geographic diversification, consider increasing exposure to underrepresented areas like Asia or Europe. This can help capture growth opportunities in developing markets and reduce reliance on the U.S. economy, offering a more balanced global investment strategy.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio features highly correlated assets, particularly between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. High correlation means these assets tend to move in tandem, limiting diversification benefits during market downturns. To enhance risk management, consider reducing exposure to overlapping assets and diversifying into uncorrelated investments. This approach can help smooth out volatility and improve the portfolio's resilience against economic shocks, ensuring a more robust investment strategy.

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 could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the current asset allocations, investors can potentially achieve a more efficient balance between risk and return. However, it's important to note that this optimization is based solely on the existing assets and their historical performance. Regularly reassessing the portfolio's alignment with personal goals and market conditions is crucial to maintaining an optimal investment strategy over time.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Weighted yield (per year) 1.84%

The portfolio's dividend yield stands at 1.84%, with the Vanguard Total World Stock Index Fund ETF Shares contributing the highest yield of 2.0%. While dividends are not the primary focus of a growth-oriented portfolio, they can provide a steady income stream and contribute to total returns. Investors seeking income may consider increasing exposure to higher-yielding assets. However, it's important to balance this with the growth strategy, ensuring that dividend-paying stocks do not excessively skew the portfolio's risk-return profile.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports long-term performance by minimizing costs. This efficient cost structure aligns well with best practices, ensuring that more of the portfolio's returns are retained. To maintain this advantage, regularly review the TER of each holding and consider replacing any high-fee assets with more cost-effective options. Keeping costs low is essential for maximizing net returns, especially in a growth-focused portfolio where every percentage point counts.

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