A well-diversified growth-focused portfolio with strong tech exposure and low-cost structure
Report created on Apr 24, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 50.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 40.00% -
SM VanEck Semiconductor ETF
SMH - US92189F6768 10.00%
This portfolio is composed predominantly of ETFs, with a significant allocation to the Vanguard Total Stock Market Index Fund ETF Shares (50%) and the Vanguard Total International Stock Index Fund ETF Shares (40%). A smaller portion is invested in the VanEck Semiconductor ETF (10%). The portfolio is heavily weighted towards equities, with 99% in stocks and only 1% in cash. This composition aligns with a growth strategy, providing broad market exposure. Such a structure offers diversification across multiple sectors and geographic regions, reducing specific risk and capturing market-wide opportunities.
Growth
Historically, the portfolio has demonstrated a strong performance with a Compound Annual Growth Rate (CAGR) of 11.15%. While the maximum drawdown of -33.87% indicates vulnerability during market downturns, the portfolio's recovery suggests resilience. The 24 days that account for 90% of returns highlight the importance of remaining invested during volatile periods. Compared to benchmarks, this performance is commendable, reflecting the portfolio's growth orientation. However, past performance is not indicative of future results, and investors should be prepared for potential fluctuations.
Projection
The portfolio's forward projection, based on a Monte Carlo simulation with 1,000 iterations, suggests a wide range of potential outcomes. The simulation uses historical data to estimate future performance, with the 5th percentile at 15.5% and the 67th percentile at 722.8% in terms of end portfolio values. This indicates a high likelihood of positive returns, with 961 simulations showing gains. The annualized return of 15.78% is optimistic but should be viewed with caution, as simulations rely on historical patterns that may not repeat.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's allocation to stocks is nearly total, with 99% in equities and a negligible 1% in cash. This heavy equity weighting is typical for a growth-oriented strategy, aiming for capital appreciation. While this can lead to higher returns, it also increases exposure to market volatility. Compared to benchmarks, this allocation leans aggressively towards equities, which may suit investors seeking long-term growth but could be challenging during market downturns. Diversification across asset classes could be considered to mitigate risk.
Sectors
- Technology 30%
- Financials 16%
- Industrials 10%
- Consumer Discretionary 10%
- Health Care 9%
- Telecommunications 7%
- Consumer Staples 5%
- Energy 4%
- Basic Materials 4%
- Real Estate 3%
- Utilities 2%
Sector allocation in this portfolio is notably tech-heavy, with 30% in technology, followed by financial services (16%) and industrials (10%). This reflects a growth-focused strategy, capitalizing on tech sector advancements. However, such concentration may lead to higher volatility, especially during interest rate hikes or tech sector corrections. Compared to benchmarks, this allocation offers diversification benefits across 11 sectors, but the tech weighting is a double-edged sword, providing growth potential and increased risk.
Regions
- North America 61%
- Europe Developed 17%
- Asia Emerging 7%
- Japan 6%
- Asia Developed 5%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is concentrated in North America (61%), with significant exposure to Europe Developed (17%) and Asia Emerging (7%). This geographic distribution provides a balance between developed and emerging markets, offering growth potential and stability. Compared to common benchmarks, the allocation is well-diversified, though slightly underweight in emerging markets. This could be an area for diversification, as emerging markets may offer higher growth prospects, albeit with increased risk.
Market capitalization
- Mega-cap 43%
- Large-cap 32%
- Mid-cap 17%
- Small-cap 5%
- Micro-cap 1%
The portfolio's market capitalization breakdown shows a preference for mega-cap (43%) and big-cap (32%) stocks, with lesser allocations to medium (17%), small (5%), and micro (1%) caps. This tilt towards larger companies provides stability and lower volatility, as mega-caps tend to be more established and resilient. However, small and medium-cap stocks can offer higher growth potential. Balancing these allocations might enhance diversification and capture growth opportunities across different company sizes.
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 risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets and allocation changes. This means reallocating investments to achieve a more efficient balance without altering the portfolio's overall risk level. While the portfolio is already well-diversified, small adjustments in asset weights could enhance performance. However, it's important to note that efficiency focuses on the risk-return trade-off, not necessarily diversification or other goals.
Dividends
- VanEck Semiconductor ETF 0.50%
- Vanguard Total Stock Market Index Fund ETF Shares 1.40%
- Vanguard Total International Stock Index Fund ETF Shares 3.10%
- Weighted yield (per year) 1.99%
The portfolio's dividend yield stands at 1.99%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.10%. Dividends can provide a steady income stream and contribute to total returns, especially important for growth investors seeking income alongside capital appreciation. Compared to typical growth portfolios, this yield is moderate, balancing growth and income. Investors might consider reinvesting dividends to enhance compounding effects or adjusting allocations to increase yield.
Ongoing product costs
- VanEck Semiconductor ETF 0.35%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.07%
The portfolio's total expense ratio (TER) is impressively low at 0.07%, with the Vanguard ETFs offering particularly low costs compared to industry averages. This cost efficiency supports better long-term performance by minimizing the drag on returns. Keeping costs low is crucial for growth-focused investors, as fees can significantly impact compounding over time. The VanEck Semiconductor ETF has a higher expense ratio of 0.35%, which is still reasonable, but monitoring and managing costs remains a key consideration.
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