Growth-Oriented Portfolio with Broad Diversification and High Historical Returns Suitable for Moderate to High Risk Tolerance

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

The portfolio is heavily invested in equities, with a strong focus on U.S. large-cap growth stocks, making up 45% of the allocation. Smaller allocations are made to U.S. small-cap value and mid-cap quality stocks, as well as developed and emerging markets. This composition suggests a growth-oriented strategy with broad diversification across different market segments. It is well-suited for investors looking to capitalize on potential high returns. To optimize, consider balancing the heavy U.S. focus with more international exposure to mitigate risks associated with market-specific volatility.

Growth Info

Historically, the portfolio has performed exceptionally well, with a compound annual growth rate (CAGR) of 19.43%. However, it has also experienced significant volatility, with a maximum drawdown of -36.73%. This indicates that while the portfolio has the potential for high returns, it is also susceptible to substantial losses during market downturns. Understanding the past performance helps in setting realistic expectations. To improve, consider strategies that reduce volatility, such as incorporating more defensive assets, while still maintaining the growth potential.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future projections. The simulation suggests a median potential growth of 510.87%. This method uses random sampling to model potential future returns, providing a range of outcomes. While the simulations are optimistic, they also highlight the inherent uncertainties in investing. To enhance future performance, maintain a diversified approach and periodically review asset allocations to ensure alignment with market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for over 99% of the allocation, with minimal cash and other assets. This heavy equity weighting aligns with a growth strategy but also increases exposure to market volatility. Understanding asset class distribution is crucial for managing risk and return expectations. To enhance diversification, consider incorporating other asset classes like bonds or real estate, which can provide stability and reduce overall portfolio risk during market downturns.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    13%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Real Estate
    1%
  • Utilities
    1%

The sector allocation is diverse, with a significant focus on technology, financial services, and consumer cyclicals. These sectors are known for their growth potential but can also be volatile. A well-diversified sector allocation can help mitigate sector-specific risks. To improve sector diversification, consider increasing exposure to underrepresented sectors like utilities or real estate, which can offer more stable returns and act as a hedge during economic downturns.

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, with limited exposure to other regions. This regional focus can lead to higher risk if the U.S. market underperforms. A balanced geographic allocation can reduce risk and enhance returns by capturing growth opportunities in different markets. To optimize geographic diversification, consider increasing exposure to emerging markets and other developed regions, which can provide additional growth potential and reduce reliance on the U.S. market.

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 can be optimized by adjusting along the efficient frontier, balancing risk and return. To achieve a riskier profile, consider increasing allocations to high-growth sectors or emerging markets. For a more conservative approach, introduce more stable assets like bonds or defensive sectors. Focus on achieving a diversified mix that aligns with personal risk tolerance and financial goals. Regularly reassessing and rebalancing the portfolio ensures it remains aligned with changing market conditions and personal objectives.

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%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 1.53%

The portfolio's dividend yield stands at 1.53%, with contributions from various ETFs. While dividends provide a steady income stream, the focus here is more on growth than income generation. A balanced approach between growth and income can enhance total returns. To improve dividend income, consider increasing allocations to ETFs or assets with higher dividend yields, ensuring that it aligns with the overall investment strategy and risk tolerance.

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%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, indicating relatively low investment costs. Low costs are crucial for maximizing net returns over time. Keeping expenses in check is a fundamental aspect of a successful investment strategy. To further optimize costs, regularly review ETF expense ratios and seek opportunities to switch to lower-cost alternatives without compromising on diversification or potential returns.

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