Growth-Oriented Portfolio with Broad Diversification and Moderate Risk Suitable for Long-Term Investors

Report created on Aug 11, 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 predominantly composed of three ETFs, with 70% in the Vanguard Total Stock Market Index Fund, 20% in the Vanguard Total International Stock Index Fund, and 10% in the Avantis U.S. Small Cap Value ETF. This composition indicates a strong focus on equities, aiming for growth through broad market exposure. The Vanguard funds provide extensive coverage of both domestic and international markets, while the Avantis fund adds a small-cap value tilt. The portfolio's diversification is broad, with a diversification score of 4 out of 5, indicating a well-distributed investment across various sectors and geographies.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 15.42%. However, it has also experienced significant volatility, with a maximum drawdown of -35.71%. This suggests that while the portfolio has the potential for high returns, it is also susceptible to substantial market swings. The 15 days that account for 90% of the returns highlight the importance of staying invested during volatile times. This performance aligns with a growth-oriented strategy, suitable for investors who can withstand market fluctuations for potential long-term gains.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, the portfolio's future performance was projected. This method uses random sampling to simulate a range of possible outcomes for a hypothetical initial investment. The results show a wide range of potential outcomes, with the 5th percentile at 13.98% and the 67th percentile at 753.73%. The median outcome is a 472.95% return, and 962 simulations resulted in positive returns. The annualized return across all simulations is 16.49%, suggesting a favorable outlook for long-term growth, albeit with inherent uncertainty.

Asset classes Info

  • Stocks
    100%

The portfolio's asset class allocation is heavily weighted towards stocks, making up 99.54% of the total. This high equity exposure is typical for a growth-oriented portfolio, aiming to maximize returns through capital appreciation. The minimal presence of cash and other asset classes suggests a focus on long-term growth rather than income generation or capital preservation. For investors with a high risk tolerance, this allocation is suitable; however, those seeking stability might consider incorporating more fixed-income assets to balance risk.

Sectors Info

  • Technology
    25%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation is diverse, with technology, financial services, and industrials being the top three. Technology leads with 24.77%, reflecting its significant role in driving growth. Financial services and industrials provide additional diversification, making up 16.43% and 11.14% of the portfolio, respectively. The presence of multiple sectors reduces sector-specific risks, enhancing the portfolio's resilience to market fluctuations. To further strengthen diversification, regularly reviewing sector performance and making adjustments as needed can help maintain balance.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 81.01% of the total allocation. This focus on the US market provides exposure to one of the world's largest economies. However, there is also a notable allocation to Europe Developed (8.01%) and Asia Emerging (3.34%), offering some international diversification. While the geographic spread is reasonable, investors seeking further diversification might explore additional regions to mitigate country-specific risks and capture growth opportunities in other 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 optimization chart suggests that while the current allocation is efficient for a growth-focused strategy, there is room for improvement. Moving along the efficient frontier could help achieve a more tailored risk-return balance. For those seeking a riskier portfolio, increasing exposure to high-growth sectors or regions might be considered. Conversely, investors looking for a more conservative approach could incorporate fixed-income assets to reduce volatility. Regular reviews and adjustments based on market conditions and personal goals are recommended to maintain an optimal portfolio.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with contributions from all three ETFs. The Vanguard Total International Stock Index Fund offers the highest yield at 3.0%, followed by the Avantis U.S. Small Cap Value ETF at 1.5%, and the Vanguard Total Stock Market Index Fund at 1.3%. While the primary focus is on growth, these dividends provide a modest income stream, which can be reinvested to enhance returns. For investors seeking higher income, exploring additional dividend-focused investments may be beneficial.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

Portfolio costs are relatively low, with an overall total expense ratio (TER) of 0.06%. The Vanguard ETFs contribute to this low cost, with expense ratios of 0.03% and 0.08%, while the Avantis ETF has a higher cost at 0.25%. Keeping investment costs low is crucial for maximizing net returns over time, as high fees can erode gains. Maintaining a focus on cost-effective investment options is advisable to ensure that expenses do not detract from the portfolio's overall performance.

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