A growth-focused portfolio with strong US equity exposure and moderate international diversification

Report created on Jan 11, 2025

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 nearly 100% of the assets in stocks, and a significant allocation to US large-cap and small-cap value ETFs. This composition aligns with a growth-oriented strategy, as equities typically offer higher potential returns over time compared to other asset classes. However, the lack of significant exposure to bonds or other asset classes may increase the portfolio's volatility. To balance risk and return, consider diversifying into other asset classes such as bonds or real estate, which can provide stability during market downturns.

Growth Info

The historical performance of this portfolio is impressive, with a Compound Annual Growth Rate (CAGR) of 14.36%. This indicates strong growth over time, outperforming many common benchmarks. However, the maximum drawdown of nearly 38% highlights the potential for significant losses during market downturns. While past performance does not guarantee future results, understanding these trends can help set realistic expectations. Consider maintaining a long-term perspective to ride out volatility and focus on achieving your growth objectives.

Projection Info

The Monte Carlo simulation used to project future performance indicates a wide range of potential outcomes, reflecting the inherent uncertainty in financial markets. With an average annualized return of 13.52% across simulations, the portfolio has a high probability of achieving positive returns. However, it's important to note that these projections are based on historical data and assumptions that may not hold in the future. Regularly reviewing and adjusting the portfolio in response to changing market conditions can help manage risks and seize opportunities.

Asset classes Info

  • Stocks
    99%

The portfolio's overwhelming allocation to stocks, particularly US equities, suggests a strong focus on capital appreciation. This strategy is suitable for investors seeking growth, but it may expose the portfolio to higher volatility. A more balanced allocation across different asset classes, such as bonds or commodities, could enhance diversification and reduce risk. Consider gradually introducing other asset classes to achieve a more balanced risk-return profile, which can help safeguard against market fluctuations.

Sectors Info

  • Technology
    20%
  • Financials
    19%
  • Industrials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Energy
    7%
  • Basic Materials
    6%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is relatively balanced, with notable concentrations in technology, financial services, and industrials. This alignment with common benchmarks suggests a diversified approach, though the high exposure to technology could lead to increased volatility, especially during interest rate changes. To mitigate sector-specific risks, consider reviewing sector weights periodically and adjusting as necessary to maintain diversification. This proactive approach can help capitalize on emerging trends while managing potential downturns in overrepresented sectors.

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 heavily tilted towards North America, with over 70% exposure. While this reflects confidence in the US market, it may limit diversification benefits. The moderate allocation to developed markets in Europe and Japan provides some international exposure, but emerging markets are underrepresented. To enhance geographic diversification and potentially capture growth opportunities in less correlated markets, consider increasing exposure to emerging economies, which can also help reduce region-specific risks.

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 may benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This approach can help maximize returns for a given level of risk or minimize risk for a desired return. While the portfolio is already well-aligned with growth objectives, fine-tuning the allocation between existing assets can enhance efficiency. Regularly review the portfolio's risk-return profile and adjust allocations to maintain alignment with personal investment goals.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.10%

With a total dividend yield of 2.1%, the portfolio provides a moderate level of income, primarily driven by the international small-cap value and total international stock index ETFs. Dividends can offer a steady income stream and help offset volatility, especially in growth-focused portfolios. While the yield is not the primary focus of this growth-oriented strategy, it can still contribute to total returns. Consider reinvesting dividends to compound growth over time, enhancing the portfolio's long-term performance.

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) 0.13%

The portfolio's total expense ratio (TER) of 0.13% is impressively low, supporting better long-term performance by minimizing costs. Low fees are crucial in maximizing net returns, especially in growth-focused portfolios where compounding can significantly impact outcomes. This cost efficiency aligns well with best practices in portfolio management. Continue to monitor and evaluate the cost-effectiveness of each holding, ensuring that fees remain competitive and do not erode returns over time.

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