A growth-focused portfolio with strong US exposure and moderate risk for long-term investors

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a moderate to high risk tolerance, seeking growth over a long-term investment horizon. It emphasizes capital appreciation through significant exposure to equities, particularly in the US market. Ideal for those comfortable with market volatility and seeking to build wealth over time, this portfolio may appeal to individuals with goals like retirement savings or wealth accumulation. While focused on growth, it also incorporates elements of diversification and income generation, aligning with investors looking for a balanced approach to risk and return.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    15.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    15.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    5.00%
  • Invesco S&P MidCap Momentum ETF
    XMMO - US46137V4648
    5.00%

This portfolio is heavily weighted towards US equities, with a significant 50% allocation to the Vanguard S&P 500 ETF. The rest of the portfolio is diversified across small-cap, international, dividend, emerging markets, and mid-cap momentum ETFs, providing broad exposure to different market segments. The high allocation to stocks (over 99%) indicates a focus on capital appreciation. This composition is relevant for investors seeking growth, as equities typically offer higher returns over the long term compared to other asset classes. To enhance diversification, consider adding other asset classes like bonds or real estate, which can help mitigate risk during market downturns.

Growth Info

Historically, the portfolio has delivered a strong compound annual growth rate (CAGR) of 15.76%, indicating robust performance over time. However, it also experienced a significant maximum drawdown of -35.59%, reflecting vulnerability during market downturns. This performance suggests that while the portfolio has the potential for high returns, it can also face considerable volatility. Understanding these dynamics is crucial for setting realistic expectations. To manage risk, consider strategies like dollar-cost averaging or rebalancing to maintain the desired asset allocation and potentially reduce the impact of market fluctuations.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns for this portfolio. With 1,000 simulations, the median (50th percentile) return is projected at 440.12%, but the 5th percentile is much lower at 33.6%. This indicates variability in potential outcomes, highlighting the importance of considering different scenarios. While historical data can provide insights, it's not a guarantee of future performance. To navigate uncertainty, regularly review the portfolio and adjust based on changes in market conditions or personal financial goals.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is predominantly composed of stock assets, with a negligible allocation to cash and other categories. This heavy emphasis on equities aligns with a growth strategy, aiming for higher returns over time. However, such concentration can increase exposure to market volatility. Diversification across various asset classes can help balance risk and return, providing stability during market fluctuations. Consider incorporating fixed-income securities or alternative investments to enhance diversification and potentially reduce portfolio volatility, aligning with a more balanced risk-reward profile.

Sectors

  • Technology
    22%
  • Financials
    18%
  • Industrials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is relatively balanced, with notable exposure to technology, financial services, and industrials. These sectors can drive growth but also introduce sector-specific risks. For instance, technology can be volatile due to rapid innovation cycles, while financials are sensitive to interest rate changes. Understanding sector dynamics is crucial for managing risk and capitalizing on growth opportunities. To mitigate sector-specific risks, consider periodically reviewing and adjusting sector allocations based on market trends and economic outlook, ensuring alignment with investment objectives and risk tolerance.

Regions

  • North America
    75%
  • Europe Developed
    6%
  • Asia Emerging
    6%
  • Asia Developed
    3%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%
  • Europe Emerging
    0%

The portfolio has a strong geographic focus on North America, accounting for over 75% of the allocation. This concentration provides exposure to the US market, known for its economic resilience and innovation. However, it also limits diversification benefits from other regions. Geographic diversification can reduce portfolio risk by spreading investments across different economic environments. Consider increasing exposure to emerging markets or other developed regions to capture growth opportunities and hedge against potential downturns in the US market, enhancing overall portfolio resilience.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Dividend Equity ETF 2.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Invesco S&P MidCap Momentum ETF 0.30%
  • Weighted yield (per year) 1.66%

The portfolio's overall dividend yield is 1.66%, with contributions from various ETFs. Dividend income can provide a steady cash flow, enhancing total returns and offering a buffer during market downturns. While growth-focused, incorporating dividend-paying assets can add stability and income potential. To optimize dividend income, consider reinvesting dividends to capitalize on compounding returns over time. Additionally, periodically review dividend yields and payout ratios to ensure they align with income goals and risk tolerance, adjusting holdings as needed.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.09%

The total expense ratio (TER) of the portfolio is 0.09%, which is relatively low and favorable for long-term investors. Lower costs mean more of the investment returns are retained, enhancing compounding over time. Managing investment costs is critical for maximizing returns. To further reduce costs, consider evaluating the expense ratios of individual ETFs and exploring lower-cost alternatives if available. Additionally, monitor any changes in fees and expenses, ensuring they remain competitive and aligned with the overall investment strategy and objectives.

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.

The portfolio may benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. By adjusting the allocation among existing holdings, the portfolio could achieve a more optimal balance between risk and return. This process involves analyzing historical returns, volatility, and correlations to determine the most efficient allocation. While optimization can enhance performance, it's essential to consider transaction costs and tax implications when making changes. Regularly review the portfolio's efficiency and adjust as needed to maintain alignment with investment goals.

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