A growth-focused portfolio with a strong tilt towards small-cap value stocks across global markets
Report created on Aug 20, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 55.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 45.00%
This portfolio is uniquely structured, focusing heavily on small-cap value stocks, with a 55% allocation to U.S. small caps and 45% to international small caps. Such a composition is indicative of a growth-oriented strategy, leveraging the potential high returns of small-cap value stocks. The emphasis on value stocks, known for trading at lower prices relative to their fundamentals, suggests a strategy aiming to capture undervalued opportunities. However, this focus also introduces a higher level of risk and volatility, given the inherent instability of smaller companies compared to their larger counterparts.
Growth
Historically, the portfolio has demonstrated robust growth, with a Compound Annual Growth Rate (CAGR) of 15.61%. This performance is notable, especially when considering the maximum drawdown of -46.28%, which underscores the portfolio's volatility during market downturns. The fact that 90% of returns came from just 15 days highlights the unpredictable nature of small-cap investing, where significant gains can be concentrated in short, sporadic bursts. This historical performance, while impressive, should be viewed with caution, as past success does not guarantee future results.
Projection
Utilizing Monte Carlo simulations, which forecast potential outcomes based on historical data, the portfolio shows a wide range of future scenarios. With a median projected increase of 500.5% and a positive outcome in 981 out of 1,000 simulations, the forward-looking perspective remains optimistic. However, it's crucial to remember that these simulations are speculative, relying on past trends that may not persist. Investors should use these projections as one of many tools in decision-making, not as definitive forecasts.
Asset classes
- Stocks 100%
The portfolio's allocation is entirely in stocks, with no presence in bonds, cash, or other asset classes. This singular focus on equities, particularly within the small-cap value segment, maximizes growth potential but also increases risk. Diversification across different asset classes could provide a buffer against market volatility, suggesting an area for potential adjustment, especially for investors with lower risk tolerance.
Sectors
- Financials 23%
- Industrials 20%
- Consumer Discretionary 17%
- Energy 13%
- Basic Materials 11%
- Technology 5%
- Consumer Staples 4%
- Health Care 3%
- Telecommunications 2%
- Real Estate 1%
- Utilities 1%
Sector-wise, the portfolio is diversified across nine sectors, with significant weightings in financial services, industrials, and consumer cyclicals. This sector allocation supports the portfolio's growth orientation but also reflects a concentration risk in sectors that can be highly cyclical and sensitive to economic changes. Balancing sector exposure could mitigate sector-specific risks and enhance stability.
Regions
- North America 58%
- Europe Developed 17%
- Japan 15%
- Australasia 4%
- Africa/Middle East 2%
- Asia Developed 1%
- Latin America 1%
Geographically, the portfolio is well-distributed, with a notable lean towards North America (58%) but also substantial allocations to developed markets in Europe and Japan. This global exposure diversifies risk and taps into growth opportunities outside the U.S. However, the minimal exposure to emerging markets may limit potential returns from these high-growth areas, suggesting an opportunity for broader geographic diversification.
Market capitalization
- Small-cap 43%
- Micro-cap 30%
- Mid-cap 23%
Focusing predominantly on small and micro-cap stocks (73% combined), the portfolio aims to exploit the higher growth potential of these segments. While small-cap stocks can offer significant returns, they come with higher volatility and risk of loss. Including a mix of medium or even large-cap stocks could provide a more balanced risk-return profile.
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.
Considering the portfolio's current allocation, optimizing for the Efficient Frontier could enhance the risk-return profile. This optimization involves adjusting asset weights to achieve the highest expected return for a given level of risk. While the portfolio shows strong growth potential, there may be opportunities to adjust allocations to reduce volatility without significantly compromising returns.
Dividends
- Avantis® International Small Cap Value ETF 3.60%
- Avantis® U.S. Small Cap Value ETF 1.70%
- Weighted yield (per year) 2.56%
The portfolio generates a combined dividend yield of 2.56%, with the international component contributing a higher yield. This income component can provide a steady cash flow, which is particularly valuable during market downturns or for investors seeking income. However, for a growth-focused investor, reinvesting dividends could further compound growth over time.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Avantis® U.S. Small Cap Value ETF 0.25%
- Weighted costs total (per year) 0.30%
With a total expense ratio (TER) of 0.30%, the portfolio is cost-efficient, which is crucial for maximizing long-term returns. Lower costs mean more of the investment's return is retained by the investor, a key factor in the growth strategy's success. Continuing to monitor and manage costs will be important for maintaining this efficiency.
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