A growth-oriented portfolio with broad diversification and a focus on US equities

Report created on Jan 16, 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 is heavily weighted towards ETFs, making up 75% of the total allocation. The remaining 25% is allocated to individual stocks. Such a composition is common for growth-focused portfolios, aiming for broad market exposure while capturing specific stock gains. This structure aligns with many benchmark portfolios, providing a solid foundation for growth. Consider whether the individual stocks align with your growth objectives and risk tolerance. Diversifying further into different asset classes could enhance stability.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.18%, with a maximum drawdown of -37.51%. This performance indicates a robust growth potential, albeit with significant volatility during downturns. Comparing this to common benchmarks, the portfolio's returns are competitive, though the drawdown suggests a need for risk management. Consider strategies that could mitigate such declines, like diversifying into less volatile assets or adding hedging strategies.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with a median outcome of a 172.06% return. The simulations provide a range of outcomes, with a 5th percentile at -58.8% and a 67th percentile at 322.07%. While these projections offer insights, remember they rely on historical data, which doesn't guarantee future performance. Use these insights to set realistic expectations and prepare for potential volatility by maintaining a balanced approach.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with 99.57% allocation, leaving minimal exposure to other asset classes. While this can drive growth, it also increases risk due to lack of diversification. Compared to typical benchmarks, this allocation is more aggressive. Consider diversifying into bonds or other asset classes to reduce risk and increase stability, especially if approaching a shorter investment horizon or seeking to preserve capital.

Sectors Info

  • Financials
    24%
  • Consumer Discretionary
    22%
  • Technology
    19%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Telecommunications
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is well-distributed, with significant exposure to financial services, consumer cyclicals, and technology. These sectors are often growth drivers but can be volatile. Your sector composition is generally aligned with benchmarks, indicating a balanced approach. However, keep an eye on sector trends; for instance, a tech-heavy portfolio may face challenges during interest rate hikes. Regularly review sector exposures to ensure alignment with market conditions and personal investment goals.

Regions Info

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

The portfolio is heavily concentrated in North America, with 85.89% exposure. This aligns with many US-focused benchmarks but limits international diversification. Exposure to Europe, Asia, and other regions is minimal, which can be a missed opportunity for growth and risk reduction. Consider increasing international exposure to capture growth in emerging markets and reduce reliance on the US economy. This could help balance regional risks and enhance overall diversification.

Redundant positions Info

  • Vanguard Dividend Appreciation Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard Dividend Appreciation and Total Stock Market ETFs. High correlation means these assets tend to move together, reducing diversification benefits. This could amplify losses during market downturns. To enhance diversification, consider replacing one of these ETFs with assets that have lower correlation, such as those in different asset classes or geographic regions. This approach could help manage risk and improve portfolio efficiency.

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 be achieved by addressing the high correlation between certain assets, which currently limits diversification benefits. By adjusting allocations to include less correlated assets, you can potentially enhance the risk-return ratio, moving the portfolio closer to the Efficient Frontier. This concept represents the best possible balance of risk and return for a given set of investments. Consider rebalancing to achieve this optimal state, keeping in mind that diversification is key to managing risk.

Dividends Info

  • The Cheesecake Factory 2.20%
  • Nike Inc 2.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.74%

The portfolio's total dividend yield is 1.74%, with contributions from both ETFs and individual stocks. Dividends provide a steady income stream, which can be reinvested for compound growth. This yield is modest but aligns with growth-oriented strategies that prioritize capital appreciation. If income generation is a goal, consider increasing allocation to higher-yielding assets. However, ensure such additions align with overall growth objectives and risk tolerance.

Ongoing product costs Info

  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • 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) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, thanks to the inclusion of cost-effective Vanguard ETFs. Low costs are crucial for maximizing long-term returns, as they reduce the drag on performance. This aligns with best practices in portfolio management. Continue to monitor costs and explore opportunities to replace higher-fee investments with more cost-effective alternatives, ensuring that any changes also align with your overall investment strategy.

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