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

Report created on Jan 5, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of ETFs, with a significant allocation to equities (88.54%) and a smaller portion to bonds (10.78%). Such a composition is typical for growth-oriented portfolios, aiming to capture equity market returns while maintaining a degree of stability through bonds. Compared to common benchmarks, this allocation leans heavily towards equities, which may increase potential returns but also risk. To ensure alignment with personal risk tolerance, consider whether this equity-heavy structure matches your investment goals.

Growth Info

Historically, the portfolio has shown a strong performance with a Compound Annual Growth Rate (CAGR) of 13.51%. This rate indicates a robust return over time, although it experienced a maximum drawdown of -30.94%, highlighting potential volatility. Compared to benchmarks, this performance is commendable for growth-focused portfolios. However, it's crucial to remember that past performance doesn't guarantee future results. Regularly reassessing your risk tolerance and investment goals in light of such volatility is advisable.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a wide range of potential returns. With an annualized return of 14.5% across simulations, outcomes vary significantly, reflecting market uncertainties. While 969 out of 1,000 simulations showed positive returns, it's important to note that these projections are not certainties. Consider using these insights to set realistic expectations and prepare for various market conditions, ensuring your portfolio aligns with your financial objectives.

Asset classes Info

  • Stocks
    89%
  • Bonds
    11%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks, with a smaller allocation to bonds, and minimal exposure to cash and other assets. This concentration in equities can drive growth but may also increase risk, especially during market downturns. Compared to benchmark norms, this allocation is typical for growth portfolios. To enhance diversification, consider whether increasing exposure to other asset classes, such as real estate or commodities, aligns with your risk tolerance and investment goals.

Sectors Info

  • Technology
    23%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a notable concentration in technology (23.48%) and financial services (14.74%). While these sectors have been strong performers historically, they can also be volatile, especially during economic shifts. The portfolio's sector distribution aligns closely with common benchmarks, indicating a balanced approach. However, consider whether this concentration fits your risk tolerance, and explore opportunities to diversify further into underrepresented sectors, possibly reducing sector-specific risks.

Regions Info

  • North America
    68%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic exposure is predominantly in North America (67.58%), with smaller allocations to Europe and Asia. This focus on North America aligns with many benchmarks but may limit exposure to growth opportunities in emerging markets. While this regional concentration can reduce currency risk and leverage familiar markets, diversifying geographically could enhance returns and reduce overall risk. Consider whether increasing exposure to underrepresented regions aligns with your investment strategy.

Redundant positions Info

  • iShares MSCI USA Quality Factor ETF
    iShares Core S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the iShares MSCI USA Quality Factor ETF and iShares Core S&P 500 ETF. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, this could lead to increased risk. To enhance diversification, consider reducing exposure to overlapping assets and incorporating investments with lower correlations, potentially improving the portfolio's risk-return balance.

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 could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation between existing assets, you can potentially enhance returns without increasing risk. It's important to note that this optimization focuses solely on the current assets and their allocations, not on diversification or other investment goals. Consider consulting with a financial advisor to explore optimization strategies that align with your objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • iShares Core S&P 500 ETF 1.30%
  • iShares MSCI USA Quality Factor ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with notable contributions from the Vanguard Total Bond Market Index Fund ETF (3.7%) and Vanguard FTSE Emerging Markets ETF (3.2%). Dividends can provide a steady income stream, which is beneficial for reinvestment or income-focused strategies. For growth-oriented investors, the focus may be less on dividends and more on capital appreciation. Evaluate whether the current dividend yield aligns with your income needs and consider adjustments if necessary.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Core S&P 500 ETF 0.03%
  • iShares MSCI USA Quality Factor ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Momentum ETF 0.13%
  • 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) 0.07%

The portfolio's total expense ratio (TER) is 0.07%, which is impressively low and supports better long-term performance by minimizing costs. Low costs are crucial for maximizing returns, as fees can significantly erode gains over time. Compared to industry averages, this TER is competitive, indicating efficient management. Ensure that the cost structure remains favorable by periodically reviewing the expense ratios of individual holdings and considering lower-cost alternatives if available.

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