Diversified equity portfolio tilted toward value small caps and quality with moderate risk and strong potential
Report created on May 4, 2024Risk profile
4/7
Diversification profile
3/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 55.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 15.00% -
AV Avantis® Emerging Markets Value ETF
AVES - US0250723725 10.00% -
XM Invesco S&P MidCap Quality ETF
XMHQ - US46137V4721 10.00% -
AV Avantis® International Small Cap Value ETF
AVDV - US0250728021 5.00% -
IH WisdomTree International Hedged Quality Dividend Growth Fund
IHDG - US97717X5941 5.00%
The portfolio is a 100% stock mix with six ETFs, anchored by a 55% allocation to a broad US large‑cap index, then tilted with meaningful slices in US small‑cap value, mid‑cap quality, and international and emerging value strategies. This structure combines a simple “core” with targeted “satellite” tilts. That’s relevant because the core offers market‑like behavior, while the satellites try to boost returns or diversify risk through different styles and regions. Overall, the setup is thoughtfully designed for long‑term growth rather than capital preservation. For someone comfortable with equity ups and downs, this kind of equity‑only structure can be an efficient way to pursue higher returns over many years.
Growth
From late 2021 to early 2026, a hypothetical $1,000 grew to about $1,536, a compound annual growth rate (CAGR) of 10.07%. CAGR is like your average speed on a road trip: it smooths out bumps to show steady progress per year. Over this period, the portfolio slightly trailed the US market by 0.57 percentage points annually but beat the global market by 1.25 points per year. The max drawdown of -23.24% was a bit milder than both benchmarks. That combination—near‑US returns with somewhat lower worst‑case drop—is solid and suggests the tilts didn’t add excessive downside in a tough stretch. Remember though, past results don’t guarantee the same pattern going forward.
Asset classes
- Stocks 100%
All assets sit in stocks, with no bonds, cash substitutes, or alternatives. That’s straightforward and easy to maintain, but it also means no built‑in cushion during market downturns. Asset allocation—how much is in stocks versus more stable assets—is the main driver of volatility and long‑term outcomes. A 100% equity stance is typically more suitable for longer time horizons and investors who can ride through deep drawdowns. The upside is historically higher expected returns; the trade‑off is potentially large short‑term losses. For someone wanting smoother rides or shorter horizons, introducing even a modest bond or cash sleeve can substantially reduce volatility without destroying long‑term growth potential.
Sectors
- Technology 23%
- Financials 16%
- Industrials 13%
- Consumer Discretionary 12%
- Health Care 9%
- Telecommunications 7%
- Energy 7%
- Consumer Staples 5%
- Basic Materials 5%
- Utilities 2%
- Real Estate 2%
Sector exposure is pleasantly broad: technology leads at 23%, followed by financials, industrials, consumer discretionary, health care, telecom, energy, and others, with modest allocations to utilities and real estate. This looks broadly in line with global equity norms, though the tilt toward value and small caps likely shifts some emphasis toward more cyclical and financial names under the surface. Sector balance matters because different parts of the economy lead at different times—tech may shine in innovation cycles, while financials or energy can outperform in inflationary or rate‑driven environments. The fact that this mix looks well spread is a big positive, helping avoid over‑reliance on any single economic story or policy backdrop.
Regions
- North America 80%
- Europe Developed 6%
- Asia Emerging 4%
- Asia Developed 4%
- Japan 3%
- Africa/Middle East 1%
- Latin America 1%
- Australasia 1%
Geographically, about 80% sits in North America, with the rest spread across developed Europe and Asia, Japan, and a handful of emerging and smaller regions. That’s a clear home‑country and US tilt relative to global benchmarks, where US exposure is usually closer to 60%. Heavy US exposure has been rewarded over the last decade, which this portfolio has partly captured. The trade‑off is higher vulnerability if US markets underperform other regions for a long stretch. The emerging markets and international small‑cap value positions do bring genuine diversification, but they’re still secondary. Some investors are comfortable with a US bias; others may prefer a more global balance to spread out country and currency risks.
Market capitalization
- Mega-cap 30%
- Large-cap 25%
- Mid-cap 20%
- Small-cap 17%
- Micro-cap 7%
Market cap exposure is nicely tiered: 30% mega‑cap, 25% large‑cap, 20% mid‑cap, 17% small‑cap, and 7% micro‑cap. That’s a noticeable tilt toward smaller companies compared with standard market indexes dominated by mega‑caps. Size exposure matters because smaller firms have historically offered higher long‑term returns, albeit with bumpier rides and more sensitivity to economic cycles. This distribution means the portfolio is less dependent on a handful of giants and more tied to the fortunes of a wide range of smaller businesses. It’s a thoughtful setup for someone willing to accept additional volatility and periodic underperformance in exchange for the potential size premium over long time horizons.
True holdings
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NV NVIDIA Corporation 4.03%
Part of fund(s):- Vanguard S&P 500 ETF
-
AA Apple Inc 3.65%
Part of fund(s):- Vanguard S&P 500 ETF
-
MS Microsoft Corporation 2.73%
Part of fund(s):- Vanguard S&P 500 ETF
-
AM Amazon.com Inc 1.91%
Part of fund(s):- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class A 1.69%
Part of fund(s):- Vanguard S&P 500 ETF
-
AV Broadcom Inc 1.41%
Part of fund(s):- Vanguard S&P 500 ETF
-
GO Alphabet Inc Class C 1.35%
Part of fund(s):- Vanguard S&P 500 ETF
-
ME Meta Platforms Inc. 1.32%
Part of fund(s):- Vanguard S&P 500 ETF
-
TS Tesla Inc 1.06%
Part of fund(s):- LS 1x Tesla Tracker ETP Securities GBP
- Vanguard S&P 500 ETF
-
BR Berkshire Hathaway Inc 0.86%
Part of fund(s):- Vanguard S&P 500 ETF
- Top 10 total 20.01%
Looking through the ETFs, the top indirect exposures are familiar mega‑cap names like NVIDIA, Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and Berkshire. These appear mainly through the S&P 500 fund, and a few show up in multiple ETFs, creating some hidden concentration in large US growth and tech‑related names. Overlap is likely higher than reported because only ETF top‑10 holdings are captured. This matters because you may feel diversified across several funds, but at the company level, a handful of giants still drive a meaningful fraction of returns. It’s not necessarily a problem, just important to realize that big global leaders remain a major performance driver beneath your value and size tilts.
Factors
Factor exposure shows high tilts to both value (63%) and size (62%), with other factors roughly neutral. Factor investing targets specific characteristics, like value (cheap vs. expensive stocks) and size (smaller vs. larger companies), that research links to long‑run returns. A pronounced value tilt means more exposure to companies trading at lower prices relative to fundamentals, which can lag during growth‑led booms but often shine in recoveries and inflationary or rate‑normalizing periods. The size tilt increases sensitivity to smaller businesses, amplifying both upside and downside. With momentum, quality, yield, and low volatility all near neutral, the portfolio behaves more like a classic “value and small‑cap believer” than a low‑volatility or income‑focused strategy.
Risk contribution
-
Vanguard S&P 500 ETF
Weight: 55.00% 54.8% -
Avantis® U.S. Small Cap Value ETF
Weight: 15.00% 18.2% -
Invesco S&P MidCap Quality ETF
Weight: 10.00% 11.6% -
Avantis® Emerging Markets Value ETF
Weight: 10.00% 7.4% -
Avantis® International Small Cap Value ETF
Weight: 5.00% 4.2% - Top 5 risk contribution 96.2%
Risk contribution shows how much each holding drives overall volatility, which can differ from simple weights. Here, the S&P 500 ETF is 55% of the portfolio and contributes about 54.84% of total risk—almost one‑for‑one. The US small‑cap value and mid‑cap quality ETFs punch slightly above their weights, contributing 18.18% and 11.60% of risk versus 15% and 10% allocations. In contrast, emerging markets and international small‑cap value contribute somewhat less risk than their weights suggest. The top three positions account for 84.62% of total risk, so small shifts among them meaningfully change the portfolio’s behavior. Periodically checking that each risk share still matches your comfort level is a simple but powerful way to keep the risk profile intentional.
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 the risk‑return chart, the current portfolio has a Sharpe ratio of 0.55, expected return of 11.28%, and volatility of 16.88%. The Sharpe ratio measures return per unit of risk—the higher, the better. The efficient frontier shows that, using the same building blocks, a different weighting could potentially deliver a Sharpe of 0.76 and return of 13.75% at roughly the same risk. Since the current mix sits about 2.52 percentage points below that frontier, there’s room to improve efficiency just by rebalancing existing holdings. That might mean modestly adjusting allocations among the six ETFs, not adding new products. The good news is that the gap is not extreme, so the current structure is still broadly sensible and aligned with growth goals.
Dividends
- Avantis® International Small Cap Value ETF 3.10%
- Avantis® Emerging Markets Value ETF 3.30%
- Avantis® U.S. Small Cap Value ETF 1.40%
- WisdomTree International Hedged Quality Dividend Growth Fund 1.90%
- Vanguard S&P 500 ETF 1.20%
- Invesco S&P MidCap Quality ETF 0.60%
- Weighted yield (per year) 1.51%
The overall dividend yield of about 1.51% is modest, roughly in line with a broad growth‑tilted equity mix. Individual funds vary: international and emerging value holdings yield over 3%, while the S&P 500 and mid‑cap quality pieces pay less than 2%. Dividends can be valuable as a steady component of total return and may help cushion pullbacks slightly, but with this yield level, the main return engine is clearly price appreciation rather than income. For an investor focused on growth and willing to reinvest payouts, this setup is reasonable. Someone seeking meaningful cash flow, though, would likely need either more yield‑oriented strategies or a separate income sleeve outside this structure.
Ongoing product costs
- Avantis® International Small Cap Value ETF 0.36%
- Avantis® Emerging Markets Value ETF 0.36%
- Avantis® U.S. Small Cap Value ETF 0.25%
- WisdomTree International Hedged Quality Dividend Growth Fund 0.58%
- Vanguard S&P 500 ETF 0.03%
- Invesco S&P MidCap Quality ETF 0.25%
- Weighted costs total (per year) 0.16%
Total estimated costs are impressively low at around 0.16% per year, driven by the very cheap S&P 500 ETF and reasonably priced factor funds. Expense ratios (TERs) are like a small drag on performance every year; reducing them compounds into real money over decades. Being this close to institutional‑level pricing is a real strength of the portfolio design. It means more of the underlying market and factor returns actually reach the investor instead of being eaten by fees. Maintaining this cost discipline—especially when considering any new funds—is one of the simplest, most reliable ways to support better long‑term outcomes without taking extra risk or making market calls.
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