A growth-focused portfolio with a strong emphasis on U.S. equities and moderate diversification

Report created on Feb 3, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with a 60% allocation in the Vanguard Total Stock Market Index Fund ETF, complemented by a 20% allocation in the Avantis U.S. Small Cap Value ETF. The remaining 20% is divided between the Vanguard Growth Index Fund ETF and the Vanguard Total International Stock Index Fund ETF. This composition aligns well with a growth-focused strategy, but it lacks significant diversification across asset classes. The portfolio's structure is more concentrated compared to a typical benchmark, which may lead to higher volatility.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 16.53%, indicating robust performance over the past years. However, it also experienced a maximum drawdown of -36.57%, which highlights the potential for significant losses during market downturns. This performance is notably better than many benchmarks, but it's important to remember that past performance is not a guarantee of future results. Consider maintaining a balanced approach to risk management to safeguard against future volatility.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, indicates a promising outlook for this portfolio. With 983 out of 1,000 simulations showing positive returns, the portfolio's annualized return is projected at 17.55%. However, it's crucial to understand that these projections are based on historical trends and may not fully capture future market conditions. Regularly reviewing the portfolio's performance and adjusting allocations as necessary can help optimize returns.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is primarily composed of stocks, with a 99% allocation, and a minimal 1% in cash. This heavy stock allocation aligns with a growth-focused strategy but may increase exposure to market volatility. Compared to typical benchmarks, this portfolio has limited diversification across asset classes. Consider incorporating other asset classes, such as bonds or real estate, to enhance diversification and potentially reduce risk during market downturns.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    8%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is dominated by technology (27%), followed by financial services (16%) and consumer cyclicals (12%). This concentration in technology aligns with recent market trends but could lead to higher volatility, especially during periods of interest rate changes. The sector composition is relatively balanced but slightly tech-heavy compared to common benchmarks. Consider monitoring sector trends and diversifying further to mitigate potential risks associated with sector-specific downturns.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%

Geographically, the portfolio is heavily skewed towards North America, with a 90% allocation. This concentration may limit exposure to global growth opportunities and increase vulnerability to U.S. market fluctuations. Compared to common benchmarks, the portfolio has limited exposure to emerging markets and other international regions. Consider increasing allocations to international markets to enhance diversification and capture potential growth in underrepresented regions.

Market capitalization Info

  • Mega-cap
    35%
  • Large-cap
    24%
  • Mid-cap
    15%
  • Small-cap
    15%
  • Micro-cap
    10%

The portfolio's market capitalization is well-distributed, with 35% in mega caps, 24% in big caps, and 15% each in medium and small caps. This diverse market cap allocation can provide a balance between stability and growth potential. However, the 10% allocation to micro caps may introduce higher volatility. Compared to benchmarks, this distribution is slightly more diversified, which can help mitigate risks associated with market cap-specific downturns.

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 could potentially be optimized using the Efficient Frontier, which involves adjusting allocations to achieve the best possible risk-return ratio. This optimization focuses solely on the current assets and their allocations, without introducing new investments. By fine-tuning the existing asset weights, the portfolio can achieve an improved balance between risk and return, enhancing overall performance while maintaining alignment with growth objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.41%

The portfolio's total dividend yield is 1.41%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.20%. While dividends can provide a steady income stream, this portfolio is more growth-oriented, with lower emphasis on dividends. For investors seeking income, consider increasing allocations to higher-yielding assets. However, for growth-focused investors, maintaining the current allocation may be more suitable.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The total expense ratio (TER) for this portfolio is 0.08%, which is impressively low and supports better long-term performance by minimizing costs. The low costs align with best practices for cost-effective investing. Compared to typical benchmarks, this portfolio's costs are highly competitive, allowing more of the returns to be retained. Continue monitoring expense ratios and explore opportunities to further reduce costs, if possible, to enhance overall returns.

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