A growth-focused portfolio with strong domestic bias and moderate international diversification

Report created on Dec 31, 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 heavily weighted towards the Vanguard S&P 500 ETF, making up 70% of the total. This concentration in a single ETF offers exposure to large-cap U.S. stocks, which are generally stable but can limit diversification. The remaining 30% is split equally between Avantis U.S. Small Cap Value ETF and Vanguard Total International Stock Index Fund. This mix introduces some diversification through small-cap and international stocks. However, the overall composition leans heavily towards U.S. equities. For better global exposure, consider increasing allocations to international markets.

Growth Info

Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 15.62%, which is impressive. This suggests robust growth, especially considering the S&P 500's strong performance in recent years. However, the maximum drawdown of -35.6% indicates vulnerability to market downturns. This highlights the importance of diversification to mitigate risk. While past performance is not a guarantee of future results, maintaining a diversified portfolio can help cushion against future market volatility.

Projection Info

A Monte Carlo simulation, which uses historical data to project future outcomes, indicates potential growth with a median return of 442.09%. However, it's important to remember that these projections are based on historical trends and assumptions, so actual future performance may vary. The high number of simulations with positive returns (969 out of 1,000) suggests a favorable outlook. To enhance potential outcomes, consider regularly reviewing and adjusting asset allocations in response to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for nearly 100% of the allocation. This high equity exposure aligns with a growth-oriented strategy but also increases risk. A more balanced approach might include bonds or other asset classes to reduce volatility. While stocks offer higher long-term returns, diversifying into other asset classes can provide stability during market downturns. Consider gradually introducing fixed-income securities to create a more resilient portfolio.

Sectors Info

  • Technology
    26%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a strong emphasis on technology, financial services, and consumer cyclicals. This sector concentration can lead to higher volatility, especially if these sectors underperform. The portfolio's sector composition aligns with major benchmarks, indicating a balanced approach. However, keeping an eye on sector trends is crucial. For instance, tech-heavy portfolios may be sensitive to interest rate changes. Diversifying across more sectors can help reduce sector-specific risks.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is heavily tilted towards North America, comprising over 85% of the total. While this reflects the strength of the U.S. market, it limits exposure to international opportunities. A more globally diversified portfolio can help mitigate regional risks and capitalize on growth in emerging markets. Consider increasing allocations to regions like Asia and Europe to enhance diversification and tap into broader economic growth.

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 potentially be optimized along the Efficient Frontier, which represents the best risk-return trade-off. By adjusting allocations among existing assets, you might achieve a more efficient portfolio. This involves finding the balance where you can get the highest possible return for a given level of risk. Remember, this optimization is based on current assets and does not account for potential new investments. Regularly reassess your risk tolerance and goals to maintain alignment.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.59%

The portfolio's total dividend yield is 1.59%, with the highest yield from the Vanguard Total International Stock Index Fund ETF at 3.4%. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. For investors seeking income, increasing exposure to high-dividend stocks or funds could be beneficial. However, it's essential to balance dividend yield with growth potential to maintain a well-rounded portfolio.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is low at 0.07%, which is favorable for long-term performance. Lower costs mean more of your returns are retained, compounding over time. The Vanguard S&P 500 ETF, with a TER of 0.03%, is particularly cost-effective. While the Avantis U.S. Small Cap Value ETF has a higher TER of 0.25%, it still remains reasonable. Continually monitoring and minimizing costs can significantly enhance net returns over the long term.

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