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Growth-Oriented Portfolio with Strong Diversification and Moderate Risk for Long-Term Investors

Report created on Nov 30, 2024

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 mainly composed of ETFs, with a strong emphasis on the Vanguard S&P 500 ETF, which makes up 70% of the total. Other ETFs, such as the Avantis U.S. Small Cap Value ETF and Vanguard FTSE Developed Markets Index Fund ETF Shares, contribute to the diversification. This composition suggests a focus on growth and broad market exposure. Having a significant portion in large-cap U.S. equities provides stability and potential for growth. The inclusion of small-cap and international ETFs adds diversity and potential for higher returns. It's essential to maintain this diversification to mitigate risks associated with market volatility.

Growth Info

Historically, the portfolio has demonstrated robust performance, with a compound annual growth rate (CAGR) of 16%. This indicates strong growth potential, though the maximum drawdown of -35.33% highlights vulnerability during market downturns. The portfolio's performance is concentrated, with only 16% of days accounting for 90% of returns. This suggests that the portfolio benefits significantly from specific market movements. To sustain this performance, it's crucial to remain invested over the long term and not react impulsively to short-term market fluctuations.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future potential. A Monte Carlo simulation is a statistical method used to model the probability of different outcomes. With an initial hypothetical investment, the 5th percentile projects a 21.78% return, while the median and 67th percentile project returns of 352.2% and 529.85%, respectively. This suggests a strong likelihood of positive returns, with 968 simulations showing gains. The projected annualized return of 13.87% reinforces the portfolio's growth potential. It's important to maintain a long-term perspective and consider these projections as part of a broader investment strategy.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, accounting for 99.56% of the asset allocation. This indicates a strong focus on equity markets, which can offer higher returns but also come with increased volatility. The minimal allocation to bonds and cash suggests a more aggressive growth strategy. While equities have historically provided substantial returns, it's crucial to ensure that the portfolio aligns with the investor's risk tolerance. If a more balanced approach is desired, consider incorporating other asset classes to reduce the overall risk and provide stability during market downturns.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is diverse, with significant exposure to technology, financial services, and consumer cyclicals. This diversification across sectors can help mitigate sector-specific risks and capture growth opportunities across different industries. Technology, being the largest sector, suggests a focus on innovation and growth potential. It's important to monitor sector performance and ensure it aligns with the investor's long-term goals. While sector diversification is beneficial, it's essential to remain adaptable and consider adjustments if certain sectors become over or under-weighted relative to market conditions.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, particularly the U.S., with 81.05% allocation. This reflects confidence in the U.S. market's stability and growth potential. However, the portfolio also includes exposure to developed markets in Europe and Japan, as well as emerging markets in Asia. This geographic diversity can provide growth opportunities and reduce the impact of regional economic downturns. It's crucial to maintain a balanced geographic allocation to capture growth potential globally. Regularly reviewing geographic exposure can help ensure alignment with the investor's risk tolerance and long-term objectives.

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.

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The portfolio optimization chart suggests that the current allocation is relatively efficient, given its growth orientation and diversification. However, there may be opportunities to further optimize risk and return by adjusting the allocation along the efficient frontier. Investors can achieve a riskier portfolio by increasing exposure to high-growth sectors or geographies, while a more conservative approach could involve adding bonds or cash. It's important to consider individual risk tolerance and investment goals when making these adjustments. Regularly evaluating the portfolio's performance and alignment with personal objectives can help ensure optimal outcomes.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.58%

The portfolio's dividend yield stands at 1.58%, with contributions from various ETFs. The Avantis International Small Cap Value ETF offers the highest yield at 3.1%, while the Vanguard S&P 500 ETF provides a more modest yield of 1.2%. While dividends are not the primary focus of this growth-oriented portfolio, they can offer a steady income stream and contribute to total returns. It's important to consider the role of dividends in the portfolio and whether they align with the investor's income needs. Balancing growth and income can enhance the overall investment strategy.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The overall cost of the portfolio is relatively low, with a total expense ratio (TER) of 0.07%. This is primarily due to the low-cost Vanguard ETFs, which dominate the portfolio. Keeping costs low is crucial for maximizing returns over the long term. The Avantis ETFs have higher expense ratios, but their potential for higher returns may justify the cost. It's important to regularly review the portfolio's costs and ensure they remain aligned with the investor's goals. Minimizing fees can significantly impact overall returns and should be a key consideration in portfolio management.

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