A growth-focused ETF portfolio with strong U.S. bias and moderate diversification

Report created on Mar 3, 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 is heavily weighted towards ETFs, with a significant 65% allocation in the Vanguard Total Stock Market Index Fund ETF. This reflects a strong preference for broad market exposure. The Avantis U.S. Small Cap Value ETF comprises 20%, adding a value tilt, while the Vanguard Total International Stock Index Fund ETF at 15% introduces some international diversification. Compared to benchmarks, this composition leans towards U.S. equities, which may limit global exposure. The high U.S. weighting aligns with a growth-focused strategy but could benefit from increased international diversification to mitigate geographical risks.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.07%, outperforming many benchmarks. However, it experienced a maximum drawdown of -36.87%, indicating significant volatility during downturns. This performance, while impressive, underscores the importance of understanding that past success doesn't guarantee future results. The high CAGR suggests strong long-term growth potential, but the drawdown highlights the need for risk management strategies. Investors may consider diversifying further to reduce potential volatility while maintaining growth prospects.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected, with 1,000 simulations conducted. The median scenario suggests a substantial growth of 409.5%, while even the conservative 5th percentile projects a 21.6% increase. The simulations indicate a high likelihood of positive returns, with 966 simulations ending positively. However, it's crucial to remember that these projections rely on historical data and assumptions, which may not hold true in the future. Investors should use these projections as a guide, not a guarantee, and consider potential changes in market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly composed of stocks, accounting for 99% of the allocation, with a negligible 1% in cash. This heavy stock allocation aligns with a growth-oriented strategy, aiming for higher returns at the cost of increased risk. While this concentration can lead to significant gains in bull markets, it also exposes the portfolio to greater volatility during downturns. Investors might consider adding other asset classes, such as bonds or real estate, to enhance diversification and potentially mitigate risk.

Sectors Info

  • Technology
    24%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector-wise, the portfolio is concentrated in Technology (24%), Financial Services (18%), and Consumer Cyclicals (12%). While these sectors have historically driven growth, they also tend to be more volatile, particularly during economic shifts. This sector allocation aligns with a growth strategy but can lead to increased risk during downturns. Balancing exposure across more sectors could reduce volatility and provide a smoother return profile. Monitoring sector trends and adjusting allocations accordingly can help manage risk and capitalize on emerging opportunities.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily skewed towards North America, with 86% exposure, leaving limited room for international diversification. While this concentration has historically benefited from U.S. market strength, it may expose the portfolio to regional economic risks. The limited exposure to Europe, Asia, and other regions suggests potential opportunities for diversification. Increasing allocations to international markets could reduce dependence on the U.S. economy and enhance resilience against regional downturns, offering a more balanced global exposure.

Market capitalization Info

  • Mega-cap
    33%
  • Large-cap
    25%
  • Mid-cap
    16%
  • Small-cap
    15%
  • Micro-cap
    11%

The portfolio's market capitalization distribution is diverse, with a significant 33% in mega-cap stocks, followed by big (25%), medium (16%), small (15%), and micro-cap (11%) stocks. This distribution provides a blend of stability and growth potential, as larger companies offer stability, while smaller ones can drive growth. However, the substantial allocation to smaller caps increases volatility. Investors should assess whether this balance aligns with their risk tolerance and consider adjusting allocations to better match their investment goals and risk appetite.

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 current allocation could potentially be optimized using the Efficient Frontier, which balances risk and return for the best possible outcome. The Efficient Frontier suggests that a portfolio can achieve the highest return for a given level of risk by adjusting asset weights. While this portfolio already aligns well with growth objectives, exploring slight reallocations among existing assets might enhance the risk-return ratio. Investors should regularly review their portfolio to ensure it remains on the Efficient Frontier, adjusting as needed to maintain optimal performance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, with contributions from the Avantis U.S. Small Cap Value ETF (1.70%), Vanguard Total Stock Market Index Fund ETF (1.30%), and Vanguard Total International Stock Index Fund ETF (3.20%). While dividends provide a steady income stream, this yield is relatively modest, reflecting the portfolio's growth focus. Investors seeking income might consider increasing exposure to higher-yielding assets. However, it's important to balance dividend income with growth potential to achieve overall investment goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, with individual costs for the Avantis U.S. Small Cap Value ETF (0.25%), Vanguard Total Stock Market Index Fund ETF (0.03%), and Vanguard Total International Stock Index Fund ETF (0.08%). These low costs support better long-term performance by minimizing the drag on returns. Maintaining such cost efficiency is beneficial, and investors should continue to monitor expense ratios to ensure they remain competitive. Keeping costs low helps maximize net returns over time.

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