A growth-oriented portfolio with significant exposure to US equities and small cap value focus

Report created on Jan 8, 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 towards equities, with the Vanguard S&P 500 ETF making up 50% of the holdings. This is complemented by 20% in Avantis U.S. Small Cap Value ETF, 20% in Vanguard Total International Stock Index Fund ETF Shares, and 10% in Avantis International Small Cap Value ETF. This composition leans towards a growth profile, typical for investors seeking capital appreciation. A common benchmark for growth portfolios is the inclusion of a mix of large-cap and small-cap stocks, as seen here. Consider diversifying further by incorporating other asset classes like bonds to balance risk.

Growth Info

Historically, the portfolio has performed strongly, achieving a Compound Annual Growth Rate (CAGR) of 14.61%. This impressive growth rate suggests effective asset selection and favorable market conditions over the period. However, the maximum drawdown of -37.24% indicates significant volatility, which is common in equity-heavy portfolios. In comparison to standard benchmarks, this performance is competitive, but it's crucial to remember that past performance does not guarantee future results. Regularly reviewing and rebalancing the portfolio can help mitigate similar drawdowns in the future.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, indicates a wide range of potential returns. With a median projection of 359.47% and an optimistic 67th percentile at 601.14%, the portfolio could see substantial growth. However, the 5th percentile projects a low of 13.11%, highlighting the inherent uncertainty in market projections. While these simulations provide insight, they rely on past data and cannot predict future events. Regularly updating projections and considering current economic conditions can enhance decision-making.

Asset classes Info

  • Stocks
    99%

The portfolio is overwhelmingly allocated to stocks, accounting for 99.49% of the holdings. This high concentration in equities aligns with a growth strategy but may expose the portfolio to significant market volatility. Compared to a more balanced benchmark, this allocation lacks diversification across asset classes such as bonds or real estate, which can provide stability during market downturns. To enhance diversification, consider introducing other asset classes to reduce risk and improve long-term stability.

Sectors Info

  • Technology
    21%
  • Financials
    18%
  • Industrials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Energy
    6%
  • Telecommunications
    6%
  • Basic Materials
    6%
  • Consumer Staples
    6%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a balanced exposure with notable weight in technology (20.82%) and financial services (18.16%). This distribution aligns well with common benchmarks, providing a broad exposure to various economic sectors. However, the high concentration in technology may lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. To mitigate this risk, consider periodically reviewing sector weights and adjusting to maintain a balanced exposure aligned with market trends and personal risk tolerance.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Japan
    6%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily skewed towards North America (72.04%), with limited exposure to emerging markets. This concentration can limit diversification benefits and expose the portfolio to regional economic risks. While developed markets like Europe and Japan offer some diversification, emerging markets can provide growth opportunities and reduce reliance on the U.S. economy. Consider increasing exposure to underrepresented regions to enhance diversification and capture potential growth in global markets.

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 current portfolio composition suggests potential for optimization using the Efficient Frontier, a concept that helps identify the best risk-return ratio. By adjusting asset weights, the portfolio might achieve a more favorable balance between risk and return. However, optimization is based solely on existing assets and does not consider external factors or future market conditions. Regularly reviewing and rebalancing the portfolio to maintain alignment with investment goals and risk tolerance can enhance long-term performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.30%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.01%

With a total dividend yield of 2.01%, the portfolio provides a modest income stream, primarily from the Avantis International Small Cap Value ETF at 4.3%. While growth portfolios typically prioritize capital appreciation over income, dividends can offer a cushion during market downturns. This yield is relatively aligned with growth strategies, but for those seeking higher income, exploring higher-yielding assets could be beneficial. Maintaining a balance between growth and income is crucial for achieving long-term financial goals.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The portfolio benefits from a low total expense ratio (TER) of 0.12%, which is favorable for long-term performance. Lower costs mean more of your returns stay in your pocket, enhancing compounding over time. This cost efficiency aligns well with best practices in portfolio management. However, it's always wise to periodically review fees and consider if lower-cost alternatives, such as index funds or ETFs, could further optimize the portfolio's cost structure and improve net returns.

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