A growth-focused portfolio with strong US exposure and moderate international diversification

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of six ETFs, with a notable 30% allocation each to the Vanguard S&P 500 ETF and the Vanguard Total International Stock Index Fund ETF. This structure emphasizes large-cap US equities and international diversification, aligning with a growth-focused strategy. The remaining 40% is split among four sector-specific ETFs, including technology and energy. Compared to common growth benchmarks, this composition shows a balanced approach to diversification, although it heavily leans on equities. A more diverse asset class exposure could enhance risk management, particularly during market downturns.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 12.98%, with a maximum drawdown of -34.13%. This performance suggests strong upside potential, albeit with significant volatility. Compared to benchmarks, the returns are impressive, but the drawdown highlights the risk inherent in a growth-focused strategy. Investors should be aware that while past performance can provide insights, it does not guarantee future results. To mitigate potential downturns, consider strategies like rebalancing or integrating assets with historically lower volatility.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a median projected return of 452.94%. While 67% of simulations showed even higher returns, the 5th percentile indicates a potential downside of 37.91%. These projections highlight the potential for substantial growth, while also acknowledging inherent risks. It's important to remember that simulations rely on past data and cannot predict future events. Investors should maintain a diversified approach and regularly review their portfolio to adapt to changing market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in equities, accounting for over 99% of the total allocation, with minimal exposure to cash and other assets. This concentration on stocks aligns with a growth-oriented strategy, which typically seeks higher returns at the cost of increased volatility. While this approach can yield significant gains, it may also expose the portfolio to greater market fluctuations. Diversifying into other asset classes, such as bonds or real estate, could provide stability and reduce overall risk, especially during periods of market stress.

Sectors Info

  • Technology
    29%
  • Energy
    14%
  • Financials
    10%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Utilities
    4%
  • Basic Materials
    3%
  • Real Estate
    3%

Sector allocation is diverse, with a notable 29% in technology and 14% in energy. This heavy tech focus can drive growth but also introduces volatility, particularly during tech sector downturns. Comparatively, financial services and consumer cyclicals provide additional growth potential, while healthcare and industrials add balance. The sector distribution aligns well with growth benchmarks but could benefit from a slight increase in defensive sectors. Diversifying across sectors can help mitigate the impact of sector-specific downturns and enhance long-term stability.

Regions Info

  • North America
    70%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic exposure is primarily in North America, making up nearly 70% of the allocation, followed by Europe and Asia. This concentration reflects a strong home-country bias, common in US-based portfolios. While this provides familiarity and potential tax benefits, it limits diversification. Increasing exposure to emerging markets or underrepresented regions like Africa and Latin America could enhance growth opportunities and reduce geographic risk. A balanced geographic allocation can buffer against regional economic downturns and currency fluctuations.

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's risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, the portfolio's allocation is close to optimal, but slight adjustments among existing assets could enhance efficiency. This process involves reallocating weights to achieve the highest expected return for a given level of risk. While optimization can improve performance, it's important to balance efficiency with diversification and other investment goals to ensure a well-rounded strategy that meets your needs.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Invesco S&P 500® High Dividend Low Volatility ETF 3.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Energy Select Sector SPDR® Fund 3.30%
  • Weighted yield (per year) 2.12%

The portfolio's average dividend yield is 2.12%, with notable contributions from the Invesco S&P 500® High Dividend Low Volatility ETF and the Vanguard Total International Stock Index Fund ETF. Dividends can provide a steady income stream and add to total returns, especially in a growth-focused portfolio. While the current yield is modest, reinvesting dividends can enhance compounding effects over time. Investors seeking higher income might explore increasing allocations to high-dividend ETFs or integrating dividend-focused strategies.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Invesco S&P 500® High Dividend Low Volatility ETF 0.30%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Energy Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio is impressively low at 0.13%, with the Vanguard S&P 500 ETF contributing the least at 0.03%. This cost efficiency supports better long-term performance, as lower fees mean more returns stay in your pocket. Compared to industry averages, these costs are highly competitive, aligning with best practices for cost-effective investing. To maintain this advantage, periodically review fund fees and consider replacing any higher-cost ETFs with similar lower-cost alternatives to maximize net returns.

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