Balanced Growth Portfolio with Strong U.S. Focus and Solid Diversification Across Sectors and Asset Classes

Report created on Nov 30, 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 composed of five ETFs, with a dominant 45% allocation in the Schwab U.S. Large-Cap Growth ETF. This suggests a strong focus on large-cap growth stocks. The Avantis U.S. Small Cap Value ETF holds a significant 30% share, adding exposure to smaller companies with value potential. The remaining 25% is diversified across mid-cap, developed, and emerging markets, providing a broad geographical exposure. This composition indicates a growth-oriented strategy with a balanced blend of different market caps and regions, which can help in capturing diverse market opportunities while managing risk.

Growth Info

Historically, the portfolio has performed impressively with a CAGR of 19.31%, indicating robust growth over time. However, it experienced a maximum drawdown of -36.64%, reflecting significant volatility during market downturns. The fact that only 19 days accounted for 90% of returns highlights the importance of market timing and staying invested to capture these gains. This performance suggests that while the portfolio can deliver strong returns, it requires a tolerance for volatility and a long-term investment horizon to ride out market fluctuations.

Projection Info

A Monte-Carlo simulation, which uses random sampling to project potential future outcomes, shows promising results for the portfolio. Assuming a hypothetical initial investment, the median (50th percentile) projection is a 546.8% increase, with a 67th percentile projection at 861.52%. With 979 out of 1,000 simulations yielding positive returns, the portfolio appears well-positioned for future growth. The annualized return across simulations stands at 17.12%, indicating potential for continued strong performance. This analysis suggests that the portfolio is likely to achieve substantial gains, though actual results will vary based on market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.54% in equities and minimal allocations in cash and other assets. This high equity exposure aligns with the growth-oriented strategy, as stocks typically offer higher returns over the long term compared to other asset classes. However, this also implies higher risk, as equities are more volatile than bonds or cash. To manage risk, it may be beneficial to consider incorporating a small allocation to fixed-income assets, which can provide stability and reduce overall portfolio volatility without significantly compromising growth potential.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    12%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is well-diversified, with a notable emphasis on technology at 27.42%, followed by financial services and consumer cyclicals. This spread across various sectors helps mitigate sector-specific risks and capitalizes on growth opportunities in different industries. Technology's leading position reflects its significant role in driving market returns, though it also introduces higher volatility. Balancing sector exposure can enhance portfolio resilience, so it's important to monitor sector trends and adjust allocations as needed to maintain a balanced risk-reward profile that aligns with long-term goals.

Regions Info

  • North America
    84%
  • Asia Emerging
    5%
  • Europe Developed
    5%
  • Asia Developed
    2%
  • Japan
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Australasia
    1%

The portfolio's geographic composition is predominantly focused on North America, accounting for 84% of the allocation. This reflects a strong home bias towards U.S. markets, which are known for their stability and growth potential. However, there is also exposure to emerging markets in Asia and Latin America, as well as developed markets in Europe and Japan. This geographical diversification can help capture growth from different regions and reduce reliance on a single market. Expanding exposure to other regions could further enhance diversification and tap into global growth opportunities.

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.

Portfolio optimization can enhance returns by adjusting asset allocations along the efficient frontier, balancing risk and reward. With a strong growth focus, there's room to explore more conservative or aggressive strategies. Moving towards the efficient frontier involves reallocating assets to achieve desired risk levels, potentially incorporating more fixed-income securities for a conservative approach or increasing equity exposure for higher returns. However, before optimizing, it's crucial to ensure the portfolio aligns with financial goals and risk tolerance. Regular reviews and adjustments are key to maintaining an optimal investment strategy.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 1.51%

With a total dividend yield of 1.51%, the portfolio provides a modest income stream, primarily from the Invesco S&P MidCap Quality ETF and the Vanguard FTSE Developed Markets Index Fund. While the focus is on growth, these dividends can enhance overall returns and provide some income stability. Reinvesting dividends can compound growth over time, boosting portfolio value. It's important to keep track of dividend yields and consider potential tax implications. Balancing growth with income-generating assets can offer a more comprehensive approach to achieving financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is quite competitive for an ETF-based portfolio. This low-cost structure helps maximize net returns by minimizing the drag on performance caused by fees. The Schwab U.S. Large-Cap Growth ETF and Vanguard funds contribute to this efficiency with their low expense ratios. Keeping costs low is crucial for long-term investment success, as high fees can erode returns over time. Regularly reviewing and optimizing the cost structure ensures that investments remain efficient and aligned with financial goals, enhancing overall portfolio performance.

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