A growth-focused portfolio with strong U.S. exposure and a moderate risk profile

Report created on Dec 12, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 60% allocated to the Vanguard S&P 500 ETF, 20% to the Vanguard Total International Stock Index Fund, and smaller allocations to Avantis International and U.S. Small Cap Value ETFs. This structure suggests a focus on long-term growth through broad market exposure, particularly in the United States. Such a composition benefits from the stability of large-cap stocks while also capturing potential growth from small-cap value stocks. To further balance risk and return, consider introducing a small percentage of bonds or alternative assets to provide stability during market downturns.

Growth Info

Historically, this portfolio has shown strong performance with a compound annual growth rate (CAGR) of 15.25%. However, it also experienced a maximum drawdown of -35.75%, indicating significant volatility. This past performance is a reflection of the portfolio's growth orientation, which typically involves higher risk and reward. While past performance is not indicative of future results, understanding these trends can help set realistic expectations. To mitigate potential future drawdowns, consider diversifying further into defensive sectors or low-volatility assets.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes for this portfolio, using historical data to simulate 1,000 scenarios. The median outcome suggests a 426.18% return, but outcomes range from 31.01% at the 5th percentile to 678.77% at the 67th percentile. While these projections provide a statistical basis for decision-making, they are inherently uncertain and should not be relied upon as guarantees. To prepare for variability, consider setting stop-loss orders or maintaining a cash reserve for flexibility.

Asset classes Info

  • Stocks
    100%

With nearly 100% of the portfolio in stocks, there's a significant concentration in a single asset class. This heavy reliance on equities can drive growth but also increases exposure to market volatility. Diversification across asset classes, such as incorporating bonds or real assets, can reduce risk and improve the portfolio's resilience to market fluctuations. Evaluating the potential benefits of a more balanced allocation could lead to a more stable risk-return profile.

Sectors Info

  • Technology
    23%
  • Financials
    16%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    6%
  • Basic Materials
    5%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio has notable sectoral concentration, with technology and financial services making up a significant portion of the holdings. While these sectors have been strong performers historically, overexposure can lead to increased risk if these sectors face downturns. Balancing exposure across a broader range of sectors, such as healthcare or utilities, may provide more stability and reduce sector-specific risks. Regularly reviewing sector allocations can help maintain a balanced approach.

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 predominantly focused on North America, with 72.13% exposure, followed by smaller allocations to Europe and Asia. While this reflects a strong home bias towards U.S. markets, it also limits exposure to potential growth opportunities in emerging markets. Expanding geographic diversification can mitigate regional risks and capture growth from different economies. Consider increasing exposure to underrepresented regions to enhance global diversification.

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.

Optimization using the Efficient Frontier suggests that the current asset allocation may not be at the optimal risk-return point. By adjusting the weightings between existing assets, it's possible to achieve a better balance of risk and return. This optimization does not necessarily mean adding new assets but rather reallocating within the current selection. Regularly reassessing the portfolio's position on the Efficient Frontier can help ensure it aligns with your risk tolerance and return expectations.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.75%

The portfolio's dividend yield stands at 1.75%, providing a modest income stream. This yield is supported by higher-yielding small-cap value ETFs, which contribute to the overall income. While dividends can enhance total returns, they should not be the sole focus for growth-oriented investors. To increase income without sacrificing growth, consider reinvesting dividends or exploring dividend growth strategies. This can compound returns over time and contribute to wealth accumulation.

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) 0.10%

The portfolio has a low total expense ratio (TER) of 0.1%, which is advantageous for long-term returns. Lower costs mean more of your investment's growth is retained, rather than lost to fees. However, it's important to regularly review expense ratios to ensure they remain competitive. Consider seeking out lower-cost alternatives if fees increase or if similar funds offer better value. Keeping costs in check is a straightforward way to enhance portfolio performance over time.

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