A growth-focused portfolio with strong US equity bias and moderate international exposure
Report created on Jan 12, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 60.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 15.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 15.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 10.00%
The portfolio is heavily weighted towards equities, with a 60% allocation to the Vanguard S&P 500 ETF. This signifies a strong focus on large-cap US stocks, complemented by 15% in small-cap value and 25% in international equities. While this composition aligns with a growth-oriented strategy, it could benefit from more diversification into other asset classes like bonds or real estate. Diversification across asset classes can help manage risk, especially during market downturns.
Growth
The portfolio's historic performance is impressive, with a CAGR of 14.66%. However, it experienced a significant max drawdown of -36.39%, indicating vulnerability during market downturns. The high CAGR suggests strong growth potential, but the drawdown highlights the importance of risk management. Consider strategies to mitigate potential losses, such as rebalancing or adding more defensive assets to the mix.
Projection
The Monte Carlo simulation projects a wide range of potential outcomes, indicating uncertainty. With a 50th percentile return of 349.33%, the portfolio shows promising growth prospects. However, the 5th percentile return of 4.35% highlights the risk of lower-than-expected returns. Simulations like these use historical data, which may not predict future results accurately. Regularly review projections and adjust the portfolio as needed to align with evolving market conditions.
Asset classes
- Stocks 100%
The portfolio is heavily skewed towards stocks, comprising 99.58% of the total allocation. This high concentration in equities suggests a strong growth focus but also increases exposure to market volatility. A more balanced allocation could include bonds or other income-generating assets to provide stability. Consider diversifying into additional asset classes to enhance risk-adjusted returns and reduce overall portfolio risk.
Sectors
- Technology 23%
- Financials 17%
- Consumer Discretionary 12%
- Industrials 12%
- Health Care 9%
- Telecommunications 7%
- Energy 6%
- Consumer Staples 6%
- Basic Materials 5%
- Utilities 2%
- Real Estate 2%
The sector allocation is well-diversified, with a notable emphasis on technology (23.14%) and financial services (16.95%). This broad sector exposure aligns with common benchmarks and supports growth potential. However, the concentration in tech could lead to higher volatility, particularly during periods of interest rate changes. Regularly assess sector weights to ensure they align with market trends and personal risk preferences.
Regions
- North America 77%
- Europe Developed 10%
- Japan 6%
- Asia Emerging 3%
- Asia Developed 2%
- Australasia 2%
- Africa/Middle East 1%
The portfolio's geographic allocation is predominantly North American (76.67%), with limited exposure to emerging markets. This strong US bias can offer stability but may miss out on growth opportunities in developing regions. Consider increasing exposure to underrepresented areas, such as Asia or Latin America, to enhance diversification and capture potential growth in these markets.
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 potentially be optimized for a better risk-return ratio using the Efficient Frontier concept. This involves adjusting the current asset allocation to achieve the best possible balance between risk and return. While this optimization focuses on existing assets, it's important to remember that it doesn't guarantee diversification or other specific investment goals. Regularly reassess the portfolio to ensure it remains efficient.
Dividends
- 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) 1.97%
The portfolio's total dividend yield of 1.97% provides a modest income stream, with the highest yield from the Avantis International Small Cap Value ETF at 4.4%. While dividends contribute to total returns, the portfolio's growth focus means income is secondary. Regularly review dividend yields and consider reinvesting them to compound growth, especially if income is not a primary goal.
Ongoing product costs
- 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's total expense ratio (TER) is impressively low at 0.1%, with the Vanguard S&P 500 ETF contributing only 0.03%. Low costs are beneficial for long-term performance, as they minimize the drag on returns. Continue to monitor and aim to maintain low-cost investments, ensuring that fees do not erode gains over time. This cost efficiency is a strong aspect of the portfolio.
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