A growth-focused portfolio with strong US equity emphasis and moderate international exposure

Report created on Dec 7, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists primarily of ETFs, with the Vanguard Total Stock Market Index Fund ETF Shares making up 75%. The Vanguard Total International Stock Index Fund ETF Shares accounts for 20%, and the Avantis U.S. Small Cap Value ETF represents 5%. This composition reflects a strong focus on equities, predominantly in the US market. Such a structure aims to capture broad market growth while maintaining some international diversification. It's crucial to monitor the balance to ensure alignment with personal investment goals, especially if market conditions shift.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.51%. However, it has experienced a maximum drawdown of -35.17%, indicating substantial volatility during downturns. This performance suggests potential for high returns, but also highlights the need for a strong stomach for risk. Investors should be prepared for significant fluctuations, especially during market corrections, and consider whether they have the capacity to endure such volatility.

Projection Info

Using a Monte Carlo simulation, which analyzes potential future outcomes based on historical data, the portfolio shows an annualized return of 16.18% across 1,000 simulations. The key percentiles suggest a wide range of outcomes, with a 5th percentile return of 21.46% and a 67th percentile return of 798.96%. While these projections provide a glimpse into possible future scenarios, it's important to remember that they rely on past data and assumptions, which may not fully capture future market dynamics.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.5% in equities and negligible amounts in cash and other assets. This allocation suggests a high-growth strategy, suited for those willing to accept greater risk for potentially higher returns. However, the lack of fixed income or alternative assets may expose the portfolio to increased volatility. To mitigate risk, consider incorporating a small percentage of bonds or other asset classes to provide stability during market downturns.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    11%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation shows a significant concentration in technology (26%), followed by financial services (16%), and consumer cyclicals (11%). This sectoral distribution aligns with a growth-focused strategy but may increase vulnerability to sector-specific downturns. Diversification across more sectors could reduce risk and enhance stability. Consider evaluating sector performance periodically and adjusting allocations to maintain a balanced risk profile, ensuring the portfolio remains resilient to economic shifts.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic exposure is predominantly in North America (81%), with limited diversification in Europe, Asia, and other regions. This concentration in the US market may benefit from domestic growth but also exposes the portfolio to country-specific risks. Expanding geographic exposure could enhance diversification and reduce reliance on a single market. Consider gradually increasing allocations to emerging markets or other regions to capture global growth opportunities.

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 can be optimized using the Efficient Frontier to achieve the best possible risk-return ratio. This involves adjusting the current asset allocation to find a balance that maximizes returns for a given level of risk. While this process does not guarantee diversification, it helps in identifying the optimal asset mix based on historical performance. Regularly reassessing the portfolio's position on the Efficient Frontier can ensure it remains aligned with investment objectives and risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.56%

The portfolio's dividend yield stands at 1.56%, with the Vanguard Total International Stock Index Fund offering the highest yield at 2.9%. While dividends contribute to total returns, the focus here is more on capital appreciation. Investors seeking income may find the yield insufficient and should consider reallocating towards higher-yielding assets if income generation is a priority. Regularly reviewing dividend policies and yields can help align the portfolio with changing income needs.

Ongoing product costs Info

  • 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) 0.05%

The portfolio's total expense ratio (TER) is relatively low at 0.05%, primarily due to the low-cost Vanguard ETFs. Keeping costs minimal is beneficial for enhancing long-term returns, as fees can significantly erode gains over time. Regularly reviewing and comparing expense ratios across similar investment options can help maintain cost efficiency. If new, lower-cost alternatives become available, consider rebalancing to optimize the cost structure and maximize net returns.

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