A growth-oriented portfolio with strong US focus and broad sector diversification

Report created on Jan 7, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio predominantly consists of ETFs, with a significant 62% allocation to the Vanguard Total Stock Market Index Fund. It is heavily weighted towards equities, making up over 99% of the portfolio. Such a high equity concentration is typical for growth-oriented portfolios, aiming for capital appreciation. While this composition aligns with growth objectives, it may expose the portfolio to higher volatility, especially during market downturns. To ensure a balanced risk-return profile, consider incorporating a modest allocation to fixed-income assets or cash to cushion against potential market fluctuations.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 14.9%, indicating robust growth over time. However, the maximum drawdown of -36.48% highlights its vulnerability during market downturns. This performance suggests that while the portfolio can achieve substantial returns, it also carries significant risk. Comparing this to a benchmark like the S&P 500, which has a similar long-term CAGR, the portfolio's performance is competitive. To mitigate drawdown risks, consider strategies such as diversification or tactical asset allocation adjustments during volatile periods.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows a median return of 333.29% with a 67th percentile return of 549.64%. With 942 out of 1,000 simulations showing positive returns, the portfolio has a high probability of future success. However, it's important to remember that these projections are based on past data and cannot guarantee future performance. Regularly reviewing and adjusting the portfolio based on changing market conditions and personal circumstances can help maintain its growth trajectory.

Asset classes Info

  • Stocks
    99%

The portfolio's asset allocation is heavily skewed towards stocks, with minimal exposure to cash or other asset classes. This allocation aligns with a growth strategy but may limit diversification benefits. Compared to a typical balanced portfolio, which might include bonds or real estate, this portfolio's asset class diversity is limited. To enhance diversification, consider introducing other asset classes that can provide stability and reduce overall risk, especially during equity market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    18%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation is well-distributed, with significant weights in technology, financial services, and industrials. This balance aligns with common benchmarks, providing a diversified exposure across various economic segments. However, the heavy weighting in technology could lead to increased volatility, especially during tech market corrections. To mitigate this risk, periodically reassess sector weights and consider rebalancing to maintain a diversified sector exposure, ensuring that no single sector disproportionately impacts portfolio performance.

Regions Info

  • North America
    80%
  • Europe Developed
    7%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Japan
    3%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

The portfolio is predominantly exposed to North American markets, accounting for nearly 80% of geographic allocation. This strong regional focus aligns with the client's US base but limits exposure to international growth opportunities. Compared to global benchmarks, this allocation is less diversified geographically. To enhance global diversification, consider increasing exposure to emerging markets or underrepresented regions, which can provide growth potential and reduce reliance on the North American market.

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 appears to be well-positioned on the Efficient Frontier, meaning it offers an optimal risk-return ratio given its current assets. This suggests that the allocation has been optimized to balance risk and return effectively. However, optimization is based solely on existing assets and their allocations. Regularly reassessing the portfolio to ensure it remains on the Efficient Frontier, especially when adding or removing assets, can help maintain its efficiency over time.

Dividends Info

  • Avantis® Emerging Markets Equity ETF 1.00%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.64%

The portfolio's dividend yield stands at 1.64%, providing a modest income stream. This yield is relatively low, reflecting the growth-oriented nature of the portfolio. While dividends can contribute to total returns, the primary focus here is capital appreciation. Investors seeking higher income may consider reallocating a portion of the portfolio to dividend-focused assets. However, it's crucial to balance income needs with growth objectives to maintain the portfolio's overall strategy.

Ongoing product costs Info

  • Avantis® Emerging Markets Equity ETF 0.33%
  • 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%, supporting better long-term performance by minimizing costs. This low-cost structure aligns with best practices in portfolio management, allowing more of the returns to be retained by the investor. However, it's important to regularly review fees and expenses to ensure they remain competitive. Consider exploring opportunities to further reduce costs, such as switching to lower-cost alternatives if available.

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