Balanced Growth Portfolio with Strong Large-Cap Focus and Moderate Risk for Long-Term Investors

Report created on Dec 1, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with a strong focus on Schwab U.S. Large-Cap Growth ETF making up 55% of the allocation. This indicates a preference for large-cap growth stocks, which can provide significant returns but also come with higher volatility. The inclusion of mid-cap and small-cap value ETFs adds a layer of diversification, though the overall diversification is moderate. The portfolio's risk classification is "Profile_Growth," suggesting an inclination towards capital appreciation over time.

Growth Info

Historically, the portfolio has performed impressively with a CAGR of 20.26%. This high growth rate is indicative of the portfolio's aggressive stance, which can be attributed to its heavy weighting in large-cap growth stocks. However, the portfolio also experienced a maximum drawdown of -35.91%, highlighting the potential for significant losses during market downturns. This performance pattern indicates that while the portfolio can yield substantial returns, it also requires a tolerance for volatility.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future potential. The median outcome suggests an 823.01% increase in value, with a 67th percentile projection reaching 1,333.73%. This simulation assumes a hypothetical initial investment and provides a range of possible outcomes, reflecting the inherent uncertainties in financial markets. The high number of simulations with positive returns (982) suggests a favorable outlook, but investors should remain aware of the associated risks.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising approximately 99.79% of the total allocation. This high concentration in equities aligns with the growth-oriented strategy, aiming for capital appreciation. The minimal presence of cash and bonds indicates a preference for maintaining liquidity and minimizing interest rate sensitivity. While this asset class allocation can drive growth, it may also expose the portfolio to higher risk during market volatility. Investors should consider whether this equity-heavy approach aligns with their risk tolerance.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    14%
  • Industrials
    13%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    5%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation within the portfolio is diverse, with a significant emphasis on technology at 29.01%. This sector's rapid growth potential aligns with the portfolio's overall strategy. Financial services and consumer cyclicals also hold substantial weights, providing exposure to various economic cycles. While the sector allocation is broad, the dominance of technology could lead to sector-specific risks. A well-rounded sector allocation can help mitigate these risks, ensuring the portfolio remains resilient in varying market conditions.

Regions Info

  • North America
    71%
  • Europe Developed
    5%
  • Japan
    4%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North American assets, accounting for 71.00% of the allocation. This regional concentration reflects a strong belief in the U.S. market's potential. However, it also exposes the portfolio to risks specific to this region. The limited exposure to other regions like Europe, Japan, and Australasia provides some diversification but remains relatively low. A more balanced geographic allocation could enhance the portfolio's resilience against regional economic 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 optimization chart indicates room for improvement in balancing risk and return. By exploring the efficient frontier, investors can adjust their allocations to achieve either a riskier or more conservative stance. A shift towards bonds could reduce risk, while increasing stock exposure might enhance returns. However, the current focus should be on optimizing within existing constraints, ensuring alignment with personal risk tolerance and financial goals before considering any significant changes.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P MidCap Momentum ETF 0.30%
  • Weighted yield (per year) 0.88%

The portfolio's dividend yield stands at a modest 0.88%, reflecting its focus on growth rather than income generation. The highest yield comes from the Avantis® International Small Cap Value ETF at 3.1%, while the Schwab U.S. Large-Cap Growth ETF offers just 0.4%. Investors seeking income may find this yield insufficient, as the portfolio prioritizes capital appreciation. Diversifying into higher-yielding assets could enhance income potential, though it may also shift the portfolio's risk-return profile.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.16%

The total expense ratio (TER) of the portfolio is 0.16%, which is relatively low and advantageous for long-term cost efficiency. The Schwab U.S. Large-Cap Growth ETF contributes to this with a minimal expense ratio of 0.04%, while the Avantis® International Small Cap Value ETF has the highest at 0.36%. Lower costs mean more returns are retained by the investor, enhancing overall performance. Maintaining a focus on low-cost investments can be a prudent strategy for maximizing net returns over time.

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