Balanced risk with strong US focus and moderate diversification for growth-oriented investors.

Report created on Dec 4, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up over 84% of the allocation. This dominance indicates a strong reliance on large-cap US stocks, which can be beneficial for stability and growth. However, the portfolio also includes international exposure through the Vanguard Total International Stock Index Fund ETF and small-cap domestic stocks via the Vanguard Small-Cap Value Index Fund ETF. While this provides some diversification, the current composition leans heavily on the US market. Considering a more balanced allocation could enhance diversification and potentially reduce risk.

Growth Info

Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 13.37%. However, the max drawdown of -34.61% highlights the potential volatility. Such performance suggests that the portfolio has capitalized on the strong performance of US large-cap stocks. The concentration in US equities has been a boon during bullish periods but could pose risks in downturns. To mitigate potential future drawdowns, diversifying into other regions or asset classes might be beneficial. Overall, the historical performance is promising but comes with inherent risks associated with market fluctuations.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance shows a wide range of outcomes. This simulation, which uses random sampling to predict future returns, suggests a median return of 262.13% and a 5th percentile return of 12.48%. The annualized return across all simulations is 11.4%, indicating solid growth potential. However, the variability in outcomes underscores the uncertainty inherent in investing. To potentially improve future outcomes, consider strategies that enhance diversification and risk management. This could help in achieving more consistent returns across varied market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for over 99% of the asset allocation. This heavy stock exposure aligns with a growth-oriented strategy but also introduces significant risk. The minimal allocation to cash and other asset classes suggests limited liquidity and safety buffers. For a balanced risk profile, consider introducing more fixed-income assets like bonds, which can provide stability and income during market volatility. While the current allocation supports growth, a more diversified asset class mix could offer better risk-adjusted returns and align with a balanced investment strategy.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%
  • Basic Materials
    3%

Sector allocation in the portfolio is skewed towards technology, financial services, and healthcare, representing a combined 54% of the portfolio. This concentration reflects a bet on sectors with high growth potential but also exposes the portfolio to sector-specific risks. While these sectors have historically performed well, diversification across a broader range of industries could reduce potential volatility. Consider assessing the sector exposure regularly and rebalancing to maintain a well-rounded portfolio. A more evenly distributed sector allocation can help mitigate risks associated with sector downturns and enhance overall portfolio resilience.

Regions Info

  • North America
    92%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with over 91% of the allocation. This focus on the US market has historically provided robust returns but also limits exposure to global growth opportunities. The remaining allocation is spread thinly across other regions, offering minimal diversification benefits. To capitalize on international growth and reduce geographic risk, consider increasing exposure to emerging markets or other developed regions. A more geographically diversified portfolio can provide a hedge against regional downturns and tap into diverse economic cycles, potentially enhancing long-term growth prospects.

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's optimization chart suggests that while current allocations are efficient, there's potential for further optimization. By moving along the efficient frontier, investors can adjust their risk-return profile. To achieve a riskier portfolio, increase exposure to growth-oriented assets. Conversely, for a more conservative approach, consider adding bonds or other fixed-income securities. Before optimizing, ensure that the portfolio aligns with overall financial goals and risk tolerance. Focus on maintaining a diversified asset allocation to balance growth potential with risk management, enhancing the portfolio's resilience in various market conditions.

Dividends Info

  • Vanguard Small-Cap Value Index Fund ETF Shares 1.90%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.39%

With a total dividend yield of 1.39%, the portfolio provides a modest income stream from dividends. The Vanguard Small-Cap Value Index Fund ETF offers the highest yield at 1.9%, followed by the Vanguard Total International Stock Index Fund ETF at 2.9%. While dividends can provide a steady income, the current yield is relatively low, reflecting the growth-oriented nature of the portfolio. To enhance income, consider increasing allocations to high-dividend-paying assets. However, this should be balanced with the overall investment strategy, ensuring that the pursuit of income does not compromise growth objectives.

Ongoing product costs Info

  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.04%. This is a significant advantage, as lower costs can enhance net returns over time. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, is particularly cost-effective. Maintaining low costs is crucial for maximizing investment returns, especially in a long-term strategy. While the current cost structure is favorable, continue to monitor expense ratios and seek opportunities to reduce costs further. This approach ensures that more of the portfolio's returns are retained, contributing to overall financial goals.

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