Growth-Oriented Portfolio with High Diversification and Strong Performance Potential for Risk-Tolerant Investors

Report created on Jul 6, 2024

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 composed of four ETFs, with a strong emphasis on growth and diversification. The Vanguard Total International Stock Index Fund ETF Shares holds the largest share at 40%, providing broad international exposure. The Schwab U.S. Large-Cap Growth ETF follows with 30%, focusing on large-cap growth stocks in the U.S. The Avantis U.S. Small Cap Value ETF at 15% and the Vanguard Total Stock Market Index Fund ETF Shares also at 15% offer a mix of small-cap value and total U.S. market exposure. This composition suggests a strategic approach to capturing growth opportunities across various markets and sectors.

Growth Info

Historically, this portfolio has delivered an impressive CAGR of 15.44%, indicating strong growth over time. With a maximum drawdown of -35.08%, it showcases some volatility, typical for growth-focused investments. The days making up 90% of returns being just 16 highlight the importance of staying invested during market fluctuations. This performance suggests that the portfolio has been well-positioned to capitalize on market upswings, although it requires a tolerance for occasional downturns. Investors should be prepared for potential volatility while benefiting from the overall upward trend.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected based on a hypothetical initial investment. The simulation suggests a wide range of outcomes, with the 5th percentile at 63.58% and the 67th percentile at 1,015.28% growth. The median outcome is a 617.22% increase, indicating potential for substantial gains. With 986 simulations showing positive returns, the portfolio is likely to perform well, though outcomes can vary. This analysis underscores the portfolio's potential for significant growth, aligning with its risk profile and growth orientation.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly allocated to stocks, with 99.33% invested in equities. A small portion, 0.62%, is held in cash, providing minimal liquidity. This heavy stock allocation is typical for a growth-focused strategy, aiming to maximize returns through equity market exposure. While this can lead to higher volatility, it also offers the potential for substantial long-term gains. Investors should be comfortable with the risks associated with a nearly all-equity portfolio, as it aligns with a higher risk tolerance and a long-term investment horizon.

Sectors Info

  • Technology
    25%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    5%
  • Consumer Staples
    5%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation in the portfolio is diverse, with a notable emphasis on technology at 25.25%, followed by financial services at 16.81%. Consumer cyclicals and industrials also have significant shares, at 12.04% and 11.29% respectively. This sector mix reflects a balanced approach, capturing growth opportunities in tech while maintaining exposure to more stable industries like financials and industrials. This diversity helps mitigate sector-specific risks and enhances potential returns. Investors should be aware of the tech-heavy focus, which can drive performance but also contribute to volatility.

Regions Info

  • North America
    63%
  • Europe Developed
    16%
  • Asia Emerging
    7%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, with 62.67% exposure, followed by Europe Developed at 15.58%. Asia Emerging and Japan also have notable allocations, at 6.64% and 6.22% respectively. This geographical distribution provides a broad exposure to global markets, with a strong emphasis on developed regions. The diversification across geographies helps reduce country-specific risks and allows for participation in global economic growth. Investors should appreciate the balance between domestic and international exposure, which can enhance returns while spreading risk.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    High correlation

Within the portfolio, there are highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund ETF Shares and the Schwab U.S. Large-Cap Growth ETF. This correlation indicates that these assets tend to move in tandem, which can amplify both gains and losses. While this can enhance returns during bullish markets, it also increases risk during downturns. Investors should be aware of this correlation and consider its impact on portfolio volatility. Diversifying further could help reduce the influence of these correlated assets on overall performance.

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 composition is broadly diversified and aligns well with the efficient frontier, aiming for optimal returns given the risk level. However, the presence of highly correlated assets suggests potential for further optimization. While the portfolio already benefits from diversification across sectors and geographies, reducing the impact of correlated assets could enhance its efficiency. Investors should consider maintaining this balance and exploring diversification strategies to minimize correlation and maximize returns, without unnecessary complexity or deviation from their risk profile.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.74%

The portfolio's dividend yield is 1.74%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. The Avantis U.S. Small Cap Value ETF also provides a notable yield of 1.5%. While the yield is modest, it complements the growth focus by providing some income. The lower yields from other ETFs, like the Schwab U.S. Large-Cap Growth ETF at 0.4%, reflect a focus on capital appreciation over income. Investors should view dividends as a secondary benefit, enhancing returns while primarily relying on growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • 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) 0.09%

The portfolio's total expense ratio is 0.09%, indicating a cost-effective investment strategy. The Vanguard Total Stock Market Index Fund ETF Shares and Schwab U.S. Large-Cap Growth ETF have particularly low expense ratios, at 0.03% and 0.04% respectively. These low costs help maximize net returns, as less of the investment's growth is eroded by fees. The slightly higher cost of the Avantis U.S. Small Cap Value ETF at 0.25% is offset by its potential for higher returns. Overall, the portfolio is well-structured to keep costs low, benefiting long-term performance.

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