Balanced Growth Portfolio with High Tech Exposure and Low Diversification for Moderate Risk Investors

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 investors who are growth-oriented and have a moderate risk tolerance. They likely aim for long-term capital appreciation and are comfortable with market fluctuations. These investors may have a longer investment horizon, allowing them to ride out periods of volatility. They are willing to accept higher risk for the potential of substantial returns, and may not prioritize immediate income. This investor type values growth over stability and is open to sector-specific opportunities.

Positions

  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    50.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    50.00%

The portfolio consists of two ETFs, each making up 50% of the total. One focuses on U.S. dividend equities, while the other targets the information technology sector. This mix results in a low diversification score, as it concentrates heavily in specific areas. Having only two ETFs limits exposure to a broader range of sectors and asset classes. While the dividend ETF offers some income potential, the tech ETF focuses on growth. This composition suggests a leaning towards growth with a moderate income component.

Growth Info

Historically, the portfolio has delivered impressive performance, with a compound annual growth rate (CAGR) of 17.01%. However, it has experienced a maximum drawdown of -32.22%, indicating significant volatility. This suggests that while the portfolio can generate strong returns, it is also susceptible to market downturns. The historical data shows that a small number of days account for most returns, highlighting the importance of timing in this investment strategy. Investors should be prepared for both strong growth and potential downturns.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, reveals potential future outcomes. This statistical method simulates various scenarios to estimate the range of possible returns. The results show a 5th percentile return of 159.94%, a median return of 804.22%, and a 67th percentile return of 1,107.31%. With 998 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, investors should remain aware of the inherent uncertainties and risks associated with market fluctuations.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is heavily weighted towards stocks, with 99.75% allocated to equities and a minimal 0.25% in cash. This allocation reflects a high-risk, high-reward strategy, suitable for investors seeking capital appreciation. The lack of bonds or other fixed-income securities means there is little cushion against market volatility. Investors should be aware that this asset class concentration may lead to significant portfolio fluctuations. To reduce risk, consider incorporating more diversified asset classes in the future.

Sectors Info

  • Technology
    55%
  • Financials
    10%
  • Health Care
    7%
  • Consumer Staples
    7%
  • Energy
    6%
  • Industrials
    6%
  • Consumer Discretionary
    5%
  • Telecommunications
    2%
  • Basic Materials
    1%
  • Utilities
    0%

Sector allocation is heavily skewed towards technology, which comprises 54.96% of the portfolio. Other sectors, like financial services and healthcare, are present but less significant. This concentration in technology can lead to higher volatility, as the sector is known for rapid changes and innovation-driven growth. While this can result in substantial gains during tech booms, it also poses risks during downturns. Investors may benefit from diversifying into other sectors to balance growth and stability.

Regions Info

  • North America
    99%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is predominantly focused on North America, with 99.22% of assets in this region. This concentration exposes the portfolio to region-specific risks, such as economic or political changes in the U.S. Minimal exposure to other regions like Europe and Asia limits the potential benefits of global diversification. Investors might consider broadening geographic exposure to mitigate regional risks and take advantage of growth opportunities in other parts of the world.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.30%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Weighted yield (per year) 1.95%

The portfolio offers a total dividend yield of 1.95%, with the Schwab U.S. Dividend Equity ETF contributing a yield of 3.3%. This provides a modest income stream, supplementing the growth focus of the Vanguard Information Technology ETF, which has a lower yield of 0.6%. For investors seeking income, the dividend component can be appealing. However, the overall yield is relatively low, suggesting that income-seeking investors may need to explore additional sources to meet their goals.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is low, at 0.08%, with the Schwab ETF at 0.06% and the Vanguard ETF at 0.1%. This cost efficiency is beneficial, as lower expenses mean more of the investment returns stay in the portfolio. Keeping costs low is essential for long-term growth, as high fees can erode returns over time. Investors should continue to monitor expenses and seek cost-effective investment options to maximize their portfolio's performance.

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.

Portfolio optimization reveals potential for improvement by adjusting the balance between risk and return. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio, depending on individual goals. Investors should first address diversification, as the current low diversity limits optimization potential. By incorporating a broader range of asset classes and sectors, the portfolio can better align with personal risk tolerance and financial objectives. Exploring strategic rebalancing may enhance overall performance.

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