A growth-oriented portfolio with a strong focus on US equities and low costs

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 seeking balanced growth with moderate to high risk tolerance and a long-term investment horizon. It prioritizes strong potential returns through a significant allocation to US equities, particularly in the technology and financial sectors, while maintaining some level of global exposure. Ideal for individuals looking to capitalize on market momentum and the growth of established companies, this investor is comfortable with market fluctuations and the inherent risks of a stock-heavy portfolio.

Positions

  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    40.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    40.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%

This portfolio is composed of three ETFs, with a heavy emphasis (80%) on US equities through the Invesco S&P 500® Momentum ETF and Vanguard Total Stock Market Index Fund ETF Shares, and a 20% allocation to international stocks via the Vanguard Total International Stock Index Fund ETF Shares. This structure suggests a growth-oriented strategy, leveraging the momentum within the S&P 500 and the broad exposure of the total stock market, while also maintaining some level of global diversification.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 17.88%, with a maximum drawdown of -32.99%. These figures highlight the portfolio's strong growth potential, though the significant drawdown indicates a higher risk level, consistent with the portfolio's risk score of 5 out of 7. The days contributing to 90% of returns being concentrated in 34.0 days indicates that timing the market plays a crucial role in achieving these returns, which can be risky for the average investor.

Projection Info

The Monte Carlo simulation, with 1,000 iterations, suggests a wide range of potential outcomes, from a low 5th percentile increase of 125.0% to a more optimistic 67th percentile increase of 1,133.4%. These projections, while based on historical data, underscore the inherent uncertainty in investing, emphasizing that past performance is not indicative of future results. The high percentage of simulations with positive returns (996 out of 1,000) is encouraging but should be approached with caution.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's asset allocation is heavily skewed towards stocks (99%), with a minimal cash holding (1%). This allocation is typical for growth-oriented investors seeking higher returns, albeit with increased volatility. The absence of bonds or other asset classes limits the portfolio's ability to hedge against stock market downturns, potentially increasing the risk during market corrections.

Sectors Info

  • Technology
    25%
  • Financials
    18%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Telecommunications
    11%
  • Consumer Staples
    7%
  • Health Care
    7%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation is diverse, with technology (25%) and financial services (18%) being the most prominent. This sector distribution reflects a common growth-oriented strategy, capitalizing on the potential high returns from the tech sector. However, the heavy weighting towards tech and financial services could expose the portfolio to sector-specific risks, such as regulatory changes or economic downturns affecting these industries disproportionately.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

The geographic allocation is heavily weighted towards North America (81%), with modest exposure to developed Europe (8%) and emerging Asian markets (3%). This distribution suggests a confidence in the US market's growth potential but also indicates a potential underexposure to emerging markets and their growth opportunities. Diversifying more into these areas could offer better risk-adjusted returns by tapping into faster-growing economies.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    3%
  • Micro-cap
    1%

The market capitalization breakdown shows a preference for larger companies, with 47% in mega-cap and 31% in big-cap stocks. This bias towards larger, more established companies is typical for investors seeking stability and lower volatility. However, the limited exposure to small and micro-cap stocks restricts the portfolio's potential to benefit from the higher growth rates these smaller companies can offer.

Dividends Info

  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.28%

The dividend yields from the ETFs contribute to the portfolio's total yield of 1.28%, with the international stock ETF offering the highest yield at 2.80%. While dividends provide a steady income stream and can help cushion against market volatility, the focus on growth-oriented ETFs means the overall yield is relatively modest. Investors seeking higher income might consider reallocating some assets towards higher-yielding investments.

Ongoing product costs Info

  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.07%

The portfolio's total Expense Ratio (TER) of 0.07% is impressively low, which is advantageous for long-term growth as it minimizes the drag on performance caused by fees. Keeping costs low is a fundamental principle of successful investing, and this portfolio aligns well with that strategy, ensuring more of the returns are retained by 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.

Considering the Efficient Frontier, this portfolio's current allocation suggests it is not fully optimized for the best possible risk-return ratio. While it shows strong growth potential, there's room for improvement in diversification across asset classes and geographic regions. Adjusting the allocation to include assets with lower correlation and exploring opportunities in emerging markets could enhance the portfolio's efficiency.

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