A globally diversified value-focused portfolio with an emphasis on small-cap equities

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

Balanced Investors

This portfolio suits an investor with a moderate to high risk tolerance, seeking growth through value investing in small-cap equities globally. The focus on value stocks, particularly in smaller companies, indicates a strategy aiming for higher-than-average returns, accepting the associated risks. It's well-suited for individuals with a long-term investment horizon, willing to ride out market volatility for the potential of significant capital appreciation. The global diversification and sectoral balance make it appropriate for those looking to spread risk across various markets and industries.

Positions

  • Dimensional U.S. Equity ETF
    DFUS - US25434V4014
    30.00%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    20.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • Dimensional International Core Equity Market ETF
    DFAI - US25434V2034
    20.00%
  • Avantis® Emerging Markets Value ETF
    AVES - US0250723725
    10.00%

This portfolio is structured around a core of value-oriented ETFs, with a significant emphasis on small-cap stocks across both U.S. and international markets. The allocation includes 30% in a U.S. equity ETF, 20% each in international and U.S. small-cap value ETFs, another 20% in an international core equity ETF, and the remaining 10% in an emerging markets value ETF. This composition suggests a strategic focus on value stocks, with small-cap exposure aimed at capturing higher growth potential. Compared to a typical balanced portfolio, this one leans more aggressively towards equities, specifically within the value and small-cap segments.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 11.10% and a maximum drawdown of -24.23%, the portfolio has demonstrated robust growth with a relatively moderate level of risk. The days contributing most to returns highlight the impact of significant market movements on performance. When benchmarked, these figures suggest the portfolio has effectively balanced risk and return, capitalizing on value and small-cap equity's potential for higher returns, despite their inherent volatility.

Projection Info

Monte Carlo simulations, which use historical data to project a range of potential future outcomes, show a median increase of 258.7% in portfolio value, suggesting strong growth potential. However, it's important to remember that these projections are based on past performance, which is not a reliable indicator of future results. The simulations indicate a high likelihood of positive returns, but investors should remain aware of the inherent uncertainties in any market forecast.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • No data
    0%
  • Bonds
    0%
  • Other
    0%

The portfolio is entirely allocated to stocks, with no positions in bonds, cash, or other asset classes. This allocation underscores a clear preference for equity investments, aligning with the portfolio's value and small-cap focus. While this can offer higher growth potential, it also carries a higher risk profile compared to more diversified portfolios that include bonds or other less volatile assets. Investors should consider whether this equity-heavy approach matches their risk tolerance and investment horizon.

Sectors Info

  • Financials
    20%
  • Industrials
    16%
  • Technology
    16%
  • Consumer Discretionary
    14%
  • Basic Materials
    9%
  • Energy
    7%
  • Health Care
    6%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocations are broadly diversified across financial services, industrials, technology, and consumer cyclicals, among others. This sectoral spread helps mitigate the risk of overexposure to any single market segment. However, the significant allocations to sectors like technology and financial services reflect a strategic bet on these areas' growth potential. Given the cyclical nature of some of these sectors, the portfolio may experience higher volatility in response to economic changes.

Regions Info

  • North America
    54%
  • Europe Developed
    18%
  • Japan
    12%
  • Asia Emerging
    5%
  • Asia Developed
    5%
  • Australasia
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is well-diversified, with over half allocated to North America and significant positions in developed European and Asian markets, as well as emerging markets. This global exposure helps spread risk across different economic regions, potentially reducing volatility and improving returns. However, the lower exposure to emerging markets, compared to some global benchmarks, might limit growth potential from these high-growth areas.

Market capitalization Info

  • Mega-cap
    23%
  • Mid-cap
    23%
  • Large-cap
    20%
  • Small-cap
    20%
  • Micro-cap
    11%

The balanced exposure across mega, medium, big, small, and micro-cap stocks indicates a deliberate strategy to capture growth across the market cap spectrum, particularly within the value investing framework. Small and micro-cap stocks, known for their higher growth potential but also higher risk, make up a significant portion of the portfolio. This approach can offer substantial rewards but requires tolerance for potential volatility.

Redundant positions Info

  • Dimensional International Core Equity Market ETF
    Avantis® International Small Cap Value ETF
    High correlation

The high correlation between the Dimensional International Core Equity Market ETF and the Avantis® International Small Cap Value ETF suggests redundancy, reducing the portfolio's diversification benefits. This overlap indicates that despite the broad geographic and sectoral spread, the portfolio may not be as diversified as intended. Reducing exposure to overlapping assets could enhance the portfolio's efficiency by lowering risk without sacrificing expected returns.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.40%
  • Avantis® Emerging Markets Value ETF 3.90%
  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Dimensional International Core Equity Market ETF 2.50%
  • Dimensional U.S. Equity ETF 1.00%
  • Weighted yield (per year) 2.21%

The portfolio's dividend yield stands at 2.21%, with individual ETF yields ranging from 1.00% to 3.90%. This yield contributes to the portfolio's total return, providing a steady income stream in addition to potential capital gains. The emphasis on value ETFs, which often focus on dividend-paying stocks, aligns with a strategy that seeks to balance growth and income, particularly suitable for investors looking for regular income alongside long-term capital appreciation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Dimensional International Core Equity Market ETF 0.18%
  • Dimensional U.S. Equity ETF 0.09%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) of 0.22% is impressively low, especially considering the broad international exposure and the focus on small-cap value stocks, which typically incur higher management fees. Keeping costs low is crucial for long-term performance, as fees can significantly erode returns over time. This cost efficiency is a strong aspect of the portfolio, supporting better net returns for the investor.

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.

Optimizing this portfolio involves addressing the high correlation between certain international ETFs to enhance diversification. By reallocating some funds from overlapping assets to underrepresented areas, such as emerging markets or different sectors, the portfolio can achieve a more efficient risk-return profile. This adjustment would adhere to the principles of the Efficient Frontier, aiming for the optimal balance of risk and return based on the current market outlook and the investor's risk tolerance.

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