Growth-Oriented Portfolio with Strong Diversification and High North American Exposure for Moderate 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 weighted towards U.S. equities, with a significant 55% allocation in the Schwab U.S. Large-Cap Growth ETF. This demonstrates a clear emphasis on growth stocks, complemented by a 30% allocation in the Avantis® U.S. Small Cap Value ETF, providing exposure to smaller, potentially undervalued companies. The remaining 15% is split equally between the Vanguard FTSE Developed and Emerging Markets ETFs, offering international diversification. This composition suggests a focus on growth, with a reasonable level of diversification across different market caps and geographies, albeit with a strong bias towards the U.S. market.

Growth Info

Historically, this portfolio has shown impressive performance with a CAGR of 19.67%, indicating robust growth over time. However, it also experienced a significant maximum drawdown of -36.23%, reflecting the inherent volatility and risk associated with growth-focused investments. The fact that 90% of the returns were concentrated in just 20 days highlights the importance of timing and market conditions in this portfolio's performance. This historical data suggests that while the portfolio has the potential for strong returns, it also requires a tolerance for periods of volatility.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses random sampling to predict potential outcomes, providing a range of possibilities. The results show a 50th percentile end portfolio value of 446.65%, with a strong 67th percentile outcome at 747.39%. Importantly, 963 simulations resulted in positive returns, indicating a favorable outlook. With an annualized return of 15.99%, the projection suggests continued strong performance, although the inherent uncertainty of the market means actual outcomes could vary significantly.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, with 99.56% of assets in this class. This high concentration in equities aligns with the portfolio's growth orientation, allowing for potential high returns but also increased risk. The minimal allocation to cash and other asset classes suggests limited liquidity and a lack of diversification into potentially less volatile assets like bonds. For a more balanced risk profile, consider incorporating a small percentage of fixed-income securities to provide stability during market downturns.

Sectors Info

  • Technology
    31%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Energy
    6%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

Sector-wise, the portfolio is predominantly invested in Technology (30.66%), followed by Financial Services (15.86%) and Consumer Cyclicals (13.28%). This concentration in growth sectors aligns with the portfolio's overall strategy but also increases vulnerability to sector-specific downturns. The presence of other sectors like Industrials and Healthcare provides some diversification, but the lack of significant exposure to defensive sectors like Utilities and Consumer Defensive could leave the portfolio exposed during economic downturns. A more balanced sector allocation could enhance stability.

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 skewed towards North America, with 85.09% of assets in this region. This strong domestic bias provides familiarity and potentially higher returns from U.S. markets but limits exposure to growth opportunities in other regions. The small allocations to Asia Emerging, Europe Developed, and other regions offer some international diversification, though not enough to significantly mitigate regional risks. Increasing exposure to diverse global markets could enhance diversification and potentially capture growth in less correlated economies.

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 optimization chart suggests a potential for fine-tuning to achieve a better balance between risk and return. By moving along the efficient frontier, it’s possible to either increase risk for potentially higher returns or reduce risk for more stability. Given the current growth focus, consider exploring options to introduce more fixed-income securities or geographically diverse assets. This could help in achieving a more conservative approach if desired. Alternatively, maintaining the current path could continue to yield high returns, albeit with associated risks.

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%
  • Weighted yield (per year) 1.10%

The portfolio's dividend yield is relatively modest at 1.1%, reflecting its growth-oriented strategy. The Avantis® U.S. Small Cap Value ETF contributes the highest yield at 1.5%, while the Schwab U.S. Large-Cap Growth ETF offers a lower yield of 0.4%. The Vanguard FTSE Developed and Emerging Markets ETFs provide higher yields of 3.0% and 2.7%, respectively, enhancing income potential. Although dividends are not the primary focus, they provide a useful income stream. For those seeking higher income, consider gradually increasing exposure to dividend-paying stocks or funds.

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%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is a low 0.11%, indicating cost-effective management. The Schwab U.S. Large-Cap Growth ETF has the lowest expense at just 0.04%, while the Avantis® U.S. Small Cap Value ETF is the highest at 0.25%. This low-cost structure is beneficial for long-term growth, as it minimizes the drag on returns. Maintaining a focus on low-cost investments will be crucial in optimizing net returns. Consider reviewing the expense ratios periodically to ensure they remain competitive and aligned with the portfolio's objectives.

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