Growth tilted equity heavy portfolio with large cap focus and modest long duration bonds

Report created on Nov 10, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

Observation The portfolio is concentrated in equities with five ETFs making up the mix and a 45% allocation to a single large cap growth ETF alongside 20% in U.S. small cap value and 30% split across developed and emerging markets. Why this matters Heavy equity weight increases return potential but also volatility relative to balanced benchmarks that mix more fixed income. Recommendation Consider explicit banded targets and a formal rebalancing rule to control drift. If the goal is growth stick with equity bias but decide a specific equity to bond ratio you will tolerate and rebalance when allocations deviate.

Growth Info

Observation Historical metrics show a strong CAGR of 16.41% with a maximum drawdown of 32.74% and that 22 days account for 90% of returns. Why this matters CAGR which is the Compound Annual Growth Rate measures average annual growth like the steady speed of a trip and shows historical strength. Large drawdowns mean high volatility and dependence on a few big up days. Recommendation Use the historical numbers to understand risk appetite but not to predict the future. Stress test with scenarios and ensure you could tolerate multi month or multi year swings in value without forced selling.

Projection Info

Observation The Monte Carlo projection ran 1,000 simulations producing a median end value of 221.5% and an annualized simulation return of 11.55% with 912 positive runs. Why this matters Monte Carlo uses random sampling based on historical return patterns to show a range of plausible outcomes not guarantees. It highlights tail outcomes for planning. Recommendation Treat simulation output as a planning tool only. Use the 5th percentile outcome as a conservative planning scenario and avoid overreliance on the median when setting withdrawal or time horizon expectations.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

Observation Asset class split is approximately 94% stocks 5% bonds and 1% cash which aligns with a growth profile but departs from common balanced benchmarks. Why this matters High equity allocation amplifies expected returns and volatility and reduces the cushioning effect bonds provide during equity downturns. Recommendation If the objective is durable growth accept equity tilt but consider a modest increase in bonds or diversifying fixed income types to dampen volatility. Set target ranges and consider holding short duration cash equivalents for liquidity needs.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    13%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    7%
  • Energy
    5%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Utilities
    1%
  • Real Estate
    1%

Observation Sector exposure is tilted to technology at 28% followed by financials 15% consumer cyclicals 13% and other sectors across the portfolio. Why this matters Tech heavy portfolios often benefit in growth cycles but can suffer when rates rise or sentiment shifts because earnings are more rate sensitive. Recommendation Review sector caps versus your comfort with cyclicality. Consider modest allocations to defensive sectors or alternative uncorrelated assets if you want to reduce sector specific risk while keeping overall growth orientation.

Regions Info

  • North America
    66%
  • Asia Emerging
    9%
  • Europe Developed
    8%
  • Asia Developed
    5%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Observation Geographic allocation is heavily North America at 66% with smaller allocations to Asia emerging 9% Europe developed 8% and other regions making up the remainder. Why this matters Home market concentration can increase exposure to a single currency and economic cycle reducing diversification benefits and increasing political or regulatory risk. Recommendation If global diversification is a goal consider gradually increasing non US developed and emerging market weights or using currency hedging rules depending on your views about currency exposure and tax consequences.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    20%
  • Small-cap
    11%
  • Micro-cap
    11%
  • Mid-cap
    11%

Observation Market cap exposure shows 42% mega cap 20% big cap and roughly 11% each for small mid and micro caps reflecting a large cap skew with intentional small cap value exposure. Why this matters Mega caps often provide stability and liquidity while small and micro caps can offer higher expected returns and diversify factor exposures but at higher volatility. Recommendation Retain a mix to capture potential small cap premiums but monitor turnover and tax impacts. Consider periodic rebalancing into small cap value after large cap run ups to harvest mean reversion.

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.

Observation The portfolio can be evaluated against an Efficient Frontier which seeks the best risk return trade off for the given set of assets assuming only allocation changes among them. Why this matters The Efficient Frontier is a mathematical curve showing portfolios that offer the highest expected return for a given level of risk or the lowest risk for a given return. Recommendation Run an optimization constrained to your current ETFs to identify whether a modest shift toward bonds or diversifying into different equity styles would improve efficiency. Note that efficiency is about risk return not necessarily other objectives like tax or liquidity.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 4.80%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.70%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.52%

Observation The blended yield is about 1.52% with the extended duration treasury ETF at 4.8% and equity ETFs ranging from 0.3% to 2.8% contributing differently to income. Why this matters Dividends and bond yields provide income and stability and can support total return especially during equity drawdowns. For growth oriented portfolios dividend yield is secondary but useful for rebalancing and cash flow. Recommendation Reinvest distributions to compound growth unless you need income. Track yield changes over time and consider whether a higher income tilt is desired for cash flow needs.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

Observation Total expense ratio across the mix is low at about 0.09% with individual ETF fees ranging from 0.04% to 0.25% which is competitive. Why this matters TER or Total Expense Ratio is the ongoing fee charged by funds and acts like a drag on returns over time similar to small leaks in a bucket. Lower costs compound into materially better outcomes over decades. Recommendation Keep costs low and watch trading costs and tax efficiency. Prefer low TER ETFs but also consider spreads liquidity and tax consequences of high turnover funds.

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