A factor tilted globally diversified portfolio using trend strategies alongside broad low cost index funds

Report created on Nov 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is built mostly from stock ETFs with a clear tilt toward value and small caps, plus two managed futures funds for trend-following and diversification. Compared with a classic balanced benchmark that usually holds a significant slice in bonds, this mix leans more toward equities while still staying within a “balanced” risk band. That matters because equity-heavy portfolios usually grow faster over long periods but can swing more in the short term. Keeping broad index funds as the core is a strong foundation. If the equity tilt ever feels too jumpy, shifting a small portion into more stable assets like high‑quality bonds or cash-like instruments could smooth the ride without fully changing the philosophy.

Growth Info

Historically, a 10.81% CAGR (Compound Annual Growth Rate) means that $10,000 growing at the same pace would roughly become about $27,000 after 10 years. That’s a strong result for a balanced risk score, especially with a max drawdown under -20%, which is milder than many stock-heavy portfolios. The “days that make up 90% of returns” being only 15 shows performance is driven by a handful of very strong days, which is normal for diversified stock portfolios and a big reason to stay invested. Still, past returns only show how this mix behaved in prior environments. Future cycles, interest rates, and policy changes can all shift outcomes in ways history can’t fully predict.

Projection Info

The Monte Carlo projection, using 1,000 simulations, shows an annualized return around 10% with a 5th percentile outcome of about 22% and a median outcome of roughly 217% total growth over the tested horizon. Monte Carlo means the computer re-rolls many possible return paths based on historical patterns and volatility, like running thousands of alternate futures. This helps frame best‑case and worst‑case ranges instead of a single forecast. The fact that 970 of 1,000 paths are positive is encouraging, but it still doesn’t remove uncertainty. Economic regimes can change in ways that historical data never saw, so these numbers should be treated as guide rails, not guarantees.

Asset classes Info

  • Stocks
    91%
  • Cash
    5%
  • Bonds
    3%
  • Other
    1%

With about 91% in stocks, 5% in cash, and only a small slice labeled bonds or other, this setup is much more equity-driven than a traditional “balanced” benchmark that might hold 40% or more in fixed income. That high stock share is why growth potential looks strong, and it also explains why the risk score sits in the middle-to-upper range rather than conservative. The cash and diversifying strategies help cushion shocks, but they won’t fully offset a major global equity slump. If stability around big life milestones is important, nudging a bit more into income-oriented or lower-volatility assets over time could keep the risk profile aligned with changing needs.

Sectors Info

  • Financials
    18%
  • Technology
    18%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Basic Materials
    6%
  • Telecommunications
    6%
  • Energy
    6%
  • Health Care
    6%
  • Consumer Staples
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector exposure is nicely spread: financials and technology each around 18%, plus meaningful allocations to industrials, consumer cyclicals, basic materials, energy, communication services, healthcare, and smaller slices in defensive areas and utilities. This looks much closer to a broad global benchmark than a concentrated thematic bet, which is a strong sign of healthy diversification. Still, the natural tilt toward value and small caps can shift the mix slightly away from some growth-heavy areas. That can help in periods when expensive growth names lag, but it may trail when those areas dominate. Periodically checking whether sector weights are drifting too far from broad market norms can keep sector risk in check while preserving the underlying factor tilt.

Regions Info

  • North America
    54%
  • Asia Emerging
    10%
  • Europe Developed
    9%
  • Asia Developed
    7%
  • Japan
    5%
  • Africa/Middle East
    2%
  • Latin America
    2%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is anchored in North America at 54%, with the rest spread across emerging Asia, developed Europe, Japan, and smaller slices in Latin America, Africa/Middle East, and Australasia. Compared to a typical global benchmark that often runs around 60% US, this leans a bit more international and emerging, which is a positive for diversification. That broader reach can reduce dependence on a single economy and currency, which matters if the US goes through a weaker decade. On the flip side, international and emerging markets can be bumpier and move differently from US markets. Staying patient through those cycles is key to actually realizing the diversification benefits.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    23%
  • Mid-cap
    18%
  • Small-cap
    14%
  • Micro-cap
    10%

Market cap exposure spans mega (27%), big (23%), mid (18%), small (14%), and micro (10%), which is far more balanced across company sizes than a standard cap‑weighted benchmark that leans heavily to mega caps. That’s a deliberate tilt toward smaller companies, which historically have offered higher long-term returns but with more volatility and deeper drawdowns at times. This spread is a genuine strength for diversification across business types and growth stages. The trade-off is that small and micro caps can feel more painful in sharp downturns or during liquidity squeezes. Keeping this tilt is fine if the time horizon is long; just be sure the ride aligns with comfort for short‑term swings.

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.

On a risk–return basis, this mix likely sits close to an efficient point given the chosen building blocks. The “Efficient Frontier” is just a curve showing the best possible trade-off between risk (volatility) and expected return using only the assets available, like finding the most bang for your buck. Within this set of ETFs, small tweaks—slightly adjusting the share of managed futures, or trimming or increasing small-cap value—could fine-tune volatility without changing the overall philosophy. Efficiency here doesn’t mean maximum diversification or lowest risk; it means the best risk-return ratio for this toolkit. Any shift should keep the core principles (broad indexing plus factor tilts and diversifiers) intact so the overall strategy remains coherent.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.30%
  • Avantis® Emerging Markets Value ETF 3.70%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • iMGP DBi Managed Futures Strategy ETF 4.60%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 2.14%

A total yield around 2.14% is respectable for an equity‑heavy allocation, and the higher yields from the value and managed futures funds help offset the lower yields in broad US equities. Dividends can act like a steady drip of cash that you can either reinvest for compounding or use for spending, particularly in later life stages. For now, this mix looks well-aligned with a growth-first, income-second approach. If future goals require more regular cash flow—say, drawing 3–4% annually—gradually increasing the share of steady income payers or more stable income strategies could help support withdrawals without overly relying on selling during market dips.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • iMGP DBi Managed Futures Strategy ETF 0.85%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.22%

With a total expense ratio around 0.22%, costs are impressively low for a portfolio that combines simple index funds with more complex factor and trend strategies. Expenses matter because they come off returns every single year; shaving even 0.2–0.3 percentage points can add thousands over decades. The ultra‑cheap broad index funds are doing heavy lifting on cost control, while the more expensive diversifiers still sit in reasonable ranges for their category. This cost structure is a real strength and aligns closely with good long-term practice. If any future changes are considered, weighing the added benefit of a new fund against its fee drag is a useful filter.

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