Portfolio with high growth potential and strong diversification suitable for risk-tolerant investors

Report created on Nov 30, 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 ETFs, with a significant emphasis on large-cap growth stocks, making up 55% of the total allocation. The remaining composition includes small-cap value and developed and emerging markets ETFs. This mix suggests a diversified approach, aiming to capture growth from different market segments. A balanced portfolio like this can help mitigate risks while still aiming for substantial returns. However, the high allocation in large-cap growth might lead to volatility, so it's important to regularly review and adjust based on market conditions.

Growth Info

Historically, this portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 19.67%. Such a high CAGR indicates strong past growth, likely driven by the large-cap growth ETF. However, it's important to note the portfolio has experienced a maximum drawdown of -36.23%, highlighting its susceptibility to market downturns. This volatility should be a consideration for investors who may not have the stomach for large fluctuations. Regularly reviewing historical performance can provide insights into how the portfolio might react under different market conditions.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a promising range of future outcomes. The median projection suggests a potential growth of 450.84%, with a 5th percentile projection at 15.0% and a 67th percentile projection at 713.3%. This wide range of outcomes highlights the inherent uncertainty in investing but also underscores the potential for significant growth. Monte Carlo simulations provide a valuable tool for understanding the range of possible future returns, helping investors make informed decisions about their risk tolerance and investment horizon.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for 99.56% of the allocation. This high concentration in equities suggests a focus on capital appreciation rather than income generation. While stocks can offer substantial returns, they also come with higher volatility and risk. Investors should be aware of the potential for significant fluctuations in value and consider whether they are comfortable with this level of risk. Diversifying into other asset classes such as bonds could help reduce overall portfolio risk and provide more stability during market downturns.

Sectors Info

  • Technology
    31%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    6%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

The sector allocation is diverse, with a notable emphasis on technology, which makes up 30.66% of the portfolio. Other significant sectors include financial services, consumer cyclicals, and industrials. This diversification across sectors can help reduce risk by spreading investments across different parts of the economy. However, the heavy weighting in technology could lead to increased volatility, given the sector's sensitivity to market changes. Regularly reviewing sector allocations can ensure that the portfolio remains well-balanced and aligned with the investor's risk tolerance and investment goals.

Regions Info

  • North America
    85%
  • Asia Emerging
    5%
  • Europe Developed
    4%
  • Asia Developed
    2%
  • Japan
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for 85.09% of the allocation. This heavy domestic focus could expose the portfolio to regional economic risks. While there is some exposure to emerging markets and developed regions outside North America, it remains relatively small. Expanding geographic diversification could help mitigate risks associated with economic downturns in a specific region. Investors might consider gradually increasing allocations to other regions to achieve a more balanced global exposure, which can enhance long-term growth potential and reduce regional risk.

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 is well-positioned for growth, but there's room for optimization. By moving along the efficient frontier, investors can adjust the risk-return profile to better suit their preferences. For those seeking a riskier portfolio, increasing exposure to high-growth sectors or emerging markets could enhance returns. Conversely, a more conservative approach might involve adding bonds or other low-volatility assets. It's important to first focus on maintaining diversification and keeping costs low before making significant adjustments. Regularly reviewing the portfolio's performance and alignment with financial goals can help ensure continued optimization.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.10%

The portfolio's dividend yield stands at a modest 1.1%, reflecting its focus on growth rather than income. The Vanguard FTSE Developed Markets Index Fund ETF contributes a higher yield of 3.0%, while the other ETFs offer lower yields. Investors seeking income might find this yield insufficient, but those prioritizing capital appreciation may be satisfied. To enhance income generation, consider adding dividend-focused investments. However, this should align with the overall investment strategy and risk tolerance. Balancing growth and income can help achieve a more comprehensive investment approach.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • 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) 0.11%

The portfolio's total expense ratio (TER) is relatively low at 0.11%, which is beneficial for long-term growth. Low costs mean more of the portfolio's returns remain in the investor's pocket, enhancing compounding over time. The Schwab U.S. Large-Cap Growth ETF, with an expense ratio of 0.04%, contributes significantly to keeping costs down. It's important to continue monitoring expense ratios, as higher costs can erode returns. Staying vigilant about investment fees and opting for low-cost options can make a significant difference in achieving financial goals over the long term.

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