A growth-focused portfolio with a strong tilt towards large-cap US equities and value-oriented small caps

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a growth-oriented profile, moderate to high risk tolerance, and a medium to long-term investment horizon. It's designed for individuals who are comfortable with market volatility and have the patience to ride out the inherent ups and downs of a heavily stock-focused strategy. The emphasis on large-cap U.S. equities, complemented by small-cap value positions, indicates a preference for a mix of stability and growth potential, making it ideal for those seeking to build wealth over time while accepting periodic fluctuations in portfolio value.

Positions

  • SPDR® Portfolio S&P 500 ETF
    SPLG - US78464A8541
    70.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    10.00%

This portfolio is heavily weighted towards the SPDR® Portfolio S&P 500 ETF, making up 70% of the allocation, emphasizing large-cap U.S. equities. The remaining 30% is split between U.S. and international small-cap value ETFs by Avantis®, suggesting a strategic tilt towards value investing within the small-cap space. This composition indicates a preference for the stability and growth potential of large-cap stocks, complemented by the higher risk-reward profile of small-cap value equities. The singular focus on stock ETFs highlights a growth-oriented strategy, albeit with moderate diversification across geographic regions and sectors.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 16.98% and a maximum drawdown of -36.83%, the portfolio has demonstrated strong historical performance, albeit with significant volatility. The days contributing to 90% of returns being so few suggest that the portfolio's gains are heavily reliant on short, strong market rallies. This performance, while impressive, underscores the importance of timing in investment decisions for this portfolio, which may not suit all investors' risk tolerance or investment horizon.

Projection Info

Monte Carlo simulations, which use historical data to forecast a range of possible future outcomes, suggest a wide range of potential returns for this portfolio. With 986 out of 1,000 simulations showing positive returns, the projections indicate a high likelihood of future growth. However, the significant spread between the 5th and 67th percentiles highlights the portfolio's risk level. Investors should consider these projections as one of many tools in decision-making, recognizing the inherent limitations of relying solely on past performance for future predictions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Bonds
    0%
  • Other
    0%

The portfolio's allocation is entirely in stocks, with no exposure to bonds, cash, or other asset classes. This allocation underscores a strong growth orientation but comes with increased volatility and risk, particularly in market downturns. Diversifying across multiple asset classes can help mitigate risks and smooth out returns over time, potentially leading to a more stable investment experience.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Telecommunications
    8%
  • Health Care
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sectoral allocation leans heavily towards technology, financial services, and consumer cyclicals, which are sectors often associated with higher growth but also higher volatility. The underrepresentation of traditionally defensive sectors like utilities and consumer defensive indicates a portfolio designed for growth rather than stability. Investors should be aware of the cyclical nature of these sectors and their potential impact on the portfolio's performance.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Japan
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Europe Emerging
    0%

With 90% of assets allocated to North America, the portfolio has a significant home bias towards the U.S. market. This concentration increases exposure to country-specific risks and may limit potential gains from global diversification. Expanding into underrepresented regions, even within the existing small-cap value ETFs, could provide broader exposure to global growth opportunities and reduce systemic risk.

Market capitalization Info

  • Mega-cap
    33%
  • Large-cap
    24%
  • Mid-cap
    18%
  • Small-cap
    14%
  • Micro-cap
    10%

The portfolio's market capitalization breakdown shows a balanced exposure across mega, big, medium, small, and micro caps, with a notable tilt towards larger companies. This balance aims to capture the stability of large caps and the growth potential of smaller caps. However, the heavy weighting towards large-cap equities, particularly in the U.S., may skew risk and return profiles, especially during periods of market volatility.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.40%
  • Avantis® U.S. Small Cap Value ETF 1.70%
  • SPDR® Portfolio S&P 500 ETF 1.10%
  • Weighted yield (per year) 1.45%

The dividend yields, ranging from 1.10% to 3.40%, contribute to the portfolio's total return, adding a layer of income on top of capital gains. While the overall yield is moderate, it reflects the growth-oriented nature of the portfolio. Investors seeking higher income may consider reallocating towards assets with higher dividend yields or diversifying into income-focused asset classes.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) of 0.10% is impressively low, enhancing net returns over the long term. Keeping investment costs low is crucial for maximizing returns, especially in growth-oriented portfolios where compound growth plays a significant role. This cost efficiency is a strong aspect of the portfolio, supporting better performance relative to more expensive alternatives.

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.

The portfolio's current configuration is close to an optimal risk-return balance, as indicated by the Efficient Frontier analysis. While the projected optimal portfolio suggests a slightly lower expected return of 16.92% with a risk level of 19.93%, this difference is marginal. Investors might consider if minor adjustments in asset allocation could achieve a more favorable risk-return profile without significantly altering the portfolio's growth trajectory.

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