Growth-Focused Portfolio with High Technology Exposure and Moderate Diversification Suitable for Risk-Tolerant 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 with a high risk tolerance and a focus on growth. They likely have a long investment horizon and are comfortable with market volatility. Such investors prioritize capital appreciation over income and are willing to endure short-term fluctuations for potential long-term gains. They may be experienced or knowledgeable about market dynamics and understand the importance of diversification. Their investment goals are likely centered around wealth accumulation rather than income generation, making them ideal candidates for a growth-focused strategy.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    35.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    25.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    20.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    20.00%

The portfolio primarily consists of four ETFs, with a significant allocation to the Vanguard S&P 500 ETF making up 35% of the portfolio. The Schwab U.S. Large-Cap Growth ETF follows at 25%, while the Avantis U.S. Small Cap Value ETF and VanEck Semiconductor ETF each hold a 20% share. This composition leans heavily towards equities, with a minor cash position. The focus on large-cap and small-cap growth stocks indicates a growth-oriented strategy. The portfolio's composition suggests a deliberate emphasis on capturing market growth, especially in the technology sector.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 22.88%. However, it has experienced a maximum drawdown of -35.11%, highlighting potential volatility. The performance is driven by a small number of days, with 90% of returns concentrated in just 23 days. This suggests a reliance on market timing and highlights the importance of maintaining a long-term perspective. Investors should be prepared for fluctuations and focus on the overall growth trajectory rather than short-term volatility.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The simulations indicate a 50th percentile end value of 1,656.92%, with potential upside reaching 2,743.02% at the 67th percentile. The annualized return across simulations is 27.8%, suggesting robust growth potential. However, this method assumes a hypothetical starting investment and does not guarantee future results. Monte-Carlo simulations provide a range of possible outcomes, helping investors understand potential risks and rewards in varying market conditions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly invested in equities, with stocks comprising 99.93% of the total allocation. This heavy stock allocation aligns with a growth-focused strategy but comes with increased risk. The minimal cash position provides little cushion during market downturns. Diversifying into other asset classes like bonds could help mitigate risk and provide more stability. A more balanced asset class distribution can enhance the portfolio's resilience against market volatility and economic downturns.

Sectors Info

  • Technology
    45%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    4%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily skewed towards the technology sector, which makes up 44.9% of the allocation. Other sectors like financial services, consumer cyclicals, and industrials have smaller representations. This concentration in technology can lead to higher returns in booming markets but increases vulnerability to sector-specific downturns. To reduce sector risk, consider diversifying into underrepresented sectors. A more balanced sector allocation can help smooth returns and reduce reliance on the performance of a single industry.

Regions Info

  • North America
    95%
  • Asia Developed
    3%
  • Europe Developed
    2%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is primarily focused on North America, with 95.4% of its assets allocated there. This regional concentration may limit exposure to growth opportunities in other parts of the world. Diversifying geographically can provide access to emerging markets and reduce the impact of regional economic downturns. While the focus on North America aligns with a domestic growth strategy, including international assets could enhance diversification and potentially improve risk-adjusted returns.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio exhibits high correlation between the Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF. This lack of diversification can lead to increased volatility and reduced risk-adjusted returns. Correlated assets tend to move in the same direction, which can amplify losses during downturns. To improve diversification, consider reducing exposure to highly correlated assets. A diversified portfolio with low correlation among its holdings can better withstand market fluctuations and improve overall stability.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.90%

The portfolio's dividend yield is relatively low at 0.9%, reflecting its growth-oriented focus. The Avantis U.S. Small Cap Value ETF contributes the highest yield at 1.5%, while other ETFs offer lower yields. This low yield is typical for growth-focused portfolios, which prioritize capital appreciation over income generation. Investors seeking regular income may need to adjust their strategy or supplement with income-generating assets. Balancing growth and income can help meet both capital appreciation and cash flow needs.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is quite low and indicates cost-effective management. The Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF have particularly low costs, contributing to the overall efficiency. Keeping investment costs low is crucial for maximizing net returns over the long term. While the current costs are favorable, regularly reviewing expense ratios ensures they remain competitive. Maintaining a low-cost portfolio is essential for optimizing long-term growth and preserving capital.

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.

Before optimizing, focus on reducing overlap among highly correlated assets. This will enhance diversification and improve risk-adjusted returns. Moving along the efficient frontier can help achieve a more conservative or riskier portfolio. To make the portfolio more conservative, consider increasing exposure to bonds or other low-risk assets. Conversely, to increase risk, allocate more to growth-oriented sectors or equities. Optimizing the portfolio requires balancing risk and return, ensuring alignment with personal financial goals and risk tolerance.

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