A growth-focused portfolio with strong US exposure and moderate risk but limited diversification

Report created on Dec 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio primarily consists of ETFs, with a strong focus on US equities. The largest allocation is to the Vanguard S&P 500 ETF at 30%, followed by the Vanguard S&P Mid-Cap 400 and Russell 2000 ETFs. This composition reflects a growth-oriented approach, with a significant emphasis on large-cap and mid-cap stocks. Compared to common benchmarks, the portfolio appears under-diversified, with a high concentration in US equities. To enhance diversification, consider incorporating more international or alternative asset classes, which could help spread risk and potentially improve returns.

Growth Info

The portfolio has demonstrated a strong historical performance with a 13% CAGR, indicating robust growth over time. The max drawdown of -33.54% highlights its exposure to market volatility, which is common in growth-focused portfolios. This performance is impressive compared to many benchmarks, suggesting effective asset selection. However, past performance does not guarantee future results, so it's crucial to regularly review and adjust the portfolio. Consider strategies to mitigate drawdowns, such as increasing diversification or incorporating defensive assets.

Projection Info

Monte Carlo simulations project a range of potential outcomes, using historical data to estimate future performance. With 1,000 simulations, the portfolio shows a 10.11% annualized return, with a 5th percentile outcome of -3.16% and a 67th percentile of 319.51%. While the median projection is positive, it's important to note the wide range of potential outcomes. This variability underscores the uncertainty inherent in investing. Regularly reassessing the portfolio's alignment with your risk tolerance and goals can help manage expectations and adapt to changing market conditions.

Asset classes Info

  • Stocks
    90%
  • Bonds
    9%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 90% of the allocation, with bonds making up nearly 9%. This stock-heavy allocation aligns with the growth profile but may expose the portfolio to significant volatility. Compared to typical balanced portfolios, this one is less diversified across asset classes. To enhance risk management, consider increasing the bond allocation or exploring alternative assets. This could provide a buffer during market downturns, potentially smoothing returns and reducing overall risk.

Sectors Info

  • Technology
    27%
  • Financials
    12%
  • Telecommunications
    11%
  • Industrials
    10%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Consumer Staples
    4%
  • Real Estate
    3%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%

Sector-wise, technology dominates the portfolio at 27%, followed by financial services and communication services. This concentration in tech suggests a potential for higher returns but also increased volatility, especially during periods of tech market corrections. Compared to benchmarks, the portfolio is tech-heavy, which can be beneficial during tech booms but risky when the sector faces headwinds. Consider diversifying into underrepresented sectors, like utilities or consumer defensives, to balance risk and capture opportunities across different economic cycles.

Regions Info

  • North America
    87%
  • Europe Developed
    2%

The portfolio's geographic allocation is predominantly North American, with over 87% exposure, indicating limited international diversification. This heavy US focus aligns with a growth strategy but may miss out on opportunities in emerging or developed international markets. Compared to global benchmarks, the portfolio could benefit from increased geographic diversification. Consider adding exposure to regions like Europe or Asia to capitalize on growth opportunities and reduce reliance on the US market, potentially enhancing long-term returns and stability.

Redundant positions Info

  • Vanguard S&P Mid-Cap 400 Index Fund ETF Shares
    Vanguard Russell 2000 Index Fund ETF Shares
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation
  • Vanguard Total International Stock Index Fund ETF Shares
    Vanguard International High Dividend Yield Index Fund ETF Shares
    High correlation

Asset correlation analysis reveals several highly correlated groups, such as the S&P Mid-Cap 400 and Russell 2000, as well as the S&P 500 and Total Stock Market ETFs. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To enhance diversification, consider replacing some of these correlated assets with alternatives that have lower correlations. This approach could reduce portfolio risk and improve the overall balance, particularly in volatile market conditions.

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 be optimized using the Efficient Frontier, which seeks the best risk-return balance. However, the presence of highly correlated assets suggests potential for improvement before optimization. By reducing overlap and enhancing diversification, the portfolio can achieve a more efficient risk-return profile. Consider reallocating between existing assets to better align with the Efficient Frontier. This approach could enhance returns for a given level of risk, but it's essential to align any changes with your broader investment goals and risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard S&P Mid-Cap 400 Index Fund ETF Shares 0.90%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 4.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Communication Services Index Fund ETF Shares 0.80%
  • Vanguard Total Corporate Bond ETF ETF Shares 4.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.80%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.00%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 3.50%
  • Weighted yield (per year) 1.20%

The portfolio's dividend yield stands at 1.2%, with contributions from both equity and bond ETFs. While not a primary focus for growth investors, dividends can provide a steady income stream and contribute to total returns. The inclusion of high dividend yield ETFs is a positive aspect, offering some income stability. For investors seeking higher income, consider increasing the allocation to dividend-focused funds. However, ensure this aligns with the growth-oriented goals and risk tolerance of the portfolio.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard S&P Mid-Cap 400 Index Fund ETF Shares 0.10%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Communication Services Index Fund ETF Shares 0.10%
  • Vanguard Total Corporate Bond ETF ETF Shares 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.10%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, reflecting Vanguard's reputation for cost-effective ETFs. Low costs are a significant advantage, enhancing long-term performance by preserving more of the returns. Compared to industry averages, this portfolio is well-positioned cost-wise. Maintaining a focus on low-cost investments is crucial for optimizing returns. Periodically review the portfolio to ensure that costs remain competitive and explore opportunities to replace higher-fee assets with more cost-effective alternatives.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey