Growth-Oriented Portfolio with High Risk and Moderate Diversification Suited for Long-Term Investors

Report created on Nov 30, 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 composed of three ETFs, with a significant allocation in Schwab U.S. Large-Cap Growth ETF at 60%, Avantis® U.S. Small Cap Value ETF at 30%, and Vanguard FTSE Emerging Markets Index Fund ETF Shares at 10%. This composition leans heavily towards growth investments, focusing primarily on large-cap growth and small-cap value stocks. The portfolio's moderate diversification is achieved through exposure to varying market capitalizations and emerging markets. While the U.S. market dominates this portfolio, the inclusion of emerging markets provides some international exposure. Consider diversifying further to mitigate potential market-specific risks.

Growth Info

Historically, the portfolio has exhibited impressive performance with a compound annual growth rate (CAGR) of 20.32%. However, this growth has come with significant volatility, demonstrated by a maximum drawdown of -36.01%. This suggests that while the portfolio has delivered strong returns, it has also experienced substantial declines during market downturns. Understanding this trade-off is crucial for aligning with your risk tolerance. To maintain high returns while managing risk, consider strategies such as rebalancing or introducing more defensive assets.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method assesses potential outcomes by simulating random variables, providing a range of possible returns. The results show a median end value increase of 600.79%, with 983 simulations yielding positive outcomes. While the average annualized return is 18.36%, the wide range of outcomes highlights inherent uncertainties. To better prepare for future market conditions, consider maintaining a diversified approach and regularly reviewing portfolio allocations.

Asset classes Info

  • Stocks
    100%

The portfolio's asset class allocation is overwhelmingly skewed towards stocks, comprising 99.55% of the total. This high stock exposure aligns with a growth-focused strategy but also introduces significant volatility. The minimal cash and other asset allocations suggest a lack of defensive assets, which can provide stability during market downturns. To reduce risk, consider diversifying into other asset classes such as bonds or real estate, which can offer more consistent returns and help balance the portfolio's overall risk profile.

Sectors Info

  • Technology
    33%
  • Financials
    15%
  • Consumer Discretionary
    13%
  • Industrials
    9%
  • Telecommunications
    9%
  • Health Care
    8%
  • Energy
    5%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation is concentrated in Technology at 32.77%, followed by Financial Services and Consumer Cyclicals. This concentration reflects a strong growth orientation, as these sectors often drive market expansion. However, overexposure to a few sectors can increase vulnerability to sector-specific downturns. Diversifying across more sectors can help mitigate these risks and provide more balanced growth opportunities. Consider reallocating some investments into underrepresented sectors to strengthen the portfolio's resilience against market fluctuations.

Regions Info

  • North America
    89%
  • Asia Emerging
    6%
  • Asia Developed
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with 89.26% exposure, limiting international diversification. While this can be advantageous in a strong U.S. market, it exposes the portfolio to regional economic risks. The limited allocation to Asia, Latin America, and other regions offers some diversification but may not be sufficient to counterbalance U.S. market volatility. To enhance global diversification, consider increasing exposure to international markets, which can provide opportunities for growth in different economic environments.

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 suggests potential for improvement. By moving along the efficient frontier, investors can achieve either a riskier or more conservative portfolio. For those seeking higher returns, increasing exposure to high-growth sectors may be beneficial. Conversely, to reduce risk, consider reallocating towards more stable, income-generating assets such as bonds. It's important to balance these adjustments with personal risk tolerance and investment goals. Regularly reviewing and rebalancing the portfolio can help maintain an optimal risk-return balance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 0.96%

The portfolio's dividend yield is relatively low at 0.96%, reflecting its growth-oriented focus. The Schwab U.S. Large-Cap Growth ETF contributes the least with a 0.4% yield, while the Vanguard FTSE Emerging Markets Index Fund ETF Shares offers the highest at 2.7%. This low yield suggests that the portfolio prioritizes capital appreciation over income generation. For investors seeking regular income, consider reallocating some investments into higher-yielding assets, such as dividend-focused ETFs or bonds, to balance growth with income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, indicating low investment costs, which is favorable for long-term growth. The Schwab U.S. Large-Cap Growth ETF offers the lowest cost at 0.04%, while the Avantis® U.S. Small Cap Value ETF is the highest at 0.25%. Keeping costs low is crucial for maximizing net returns over time. While the current costs are competitive, regularly reviewing and comparing expense ratios can help ensure that the portfolio remains cost-effective and aligned with financial goals.

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