Broadly Diversified Growth Portfolio with High Technology Exposure and Robust Performance

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 is suitable for an investor with a high risk tolerance, aiming for significant capital appreciation over a long investment horizon. Such an investor is likely comfortable with market volatility and can withstand substantial drawdowns. Their primary goal is growth rather than income, and they are willing to stay invested through market fluctuations to achieve higher returns.

Positions

  • Vanguard Total World Stock Index Fund ETF Shares
    VT - US9220427424
    25.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    20.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%
  • Technology Select Sector SPDR® Fund
    XLK - US81369Y8030
    15.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    10.00%

The portfolio is composed of six ETFs, with a significant focus on stocks. The Vanguard Total World Stock Index Fund ETF Shares and the Vanguard Total Stock Market Index Fund ETF Shares make up 45% of the portfolio, providing broad market exposure. Additionally, the Vanguard Total International Stock Index Fund ETF Shares adds another 20%, enhancing global diversification. The Technology Select Sector SPDR® Fund represents 15%, indicating a strong sector tilt towards technology. Smaller allocations to the Avantis® U.S. Small Cap Value ETF and the Schwab U.S. Large-Cap Growth ETF add diversity within the U.S. market.

Growth

Historically, this portfolio has delivered a compound annual growth rate (CAGR) of 14.45%. This is impressive and suggests strong past performance. However, the maximum drawdown of -34.65% indicates significant volatility, which is typical for a growth-focused portfolio. The concentration of returns within just 14 days out of the year underscores the importance of staying invested to capture these gains. This historical data suggests the portfolio has done well but comes with notable risks.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential future outcomes. Assuming a hypothetical initial investment, the 5th percentile projection is an 83.91% return, while the median (50th percentile) is 657.87%, and the 67th percentile is 1,055.68%. The annualized return across all simulations is 18.87%, with 988 out of 1,000 simulations yielding positive returns. This indicates a high likelihood of future growth but also highlights the uncertainty and potential for significant variation.

Asset classes

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

The portfolio is heavily weighted towards stocks, accounting for approximately 99% of the total allocation. This high equity exposure aligns with the growth objective but also introduces higher risk and volatility. There is a minimal allocation to cash and other assets. For a growth-focused investor, this aggressive stance can be beneficial, but it also means the portfolio may suffer during market downturns. Diversifying into bonds or other asset classes could help mitigate risk.

Sectors

  • Technology
    35%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    8%
  • Telecommunications
    6%
  • Energy
    5%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector-wise, the portfolio is heavily tilted towards technology, which makes up about 34.56% of the total allocation. Financial services, consumer cyclicals, and industrials also have significant representation. This sector concentration can drive high returns if technology continues to perform well but could also lead to increased volatility. Broadening sector exposure might help in stabilizing returns and reducing sector-specific risks.

Regions

  • North America
    72%
  • Europe Developed
    12%
  • Japan
    5%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, which accounts for 72.24% of the allocation. Europe Developed, Japan, and Asia Emerging follow, providing some international diversification. However, the heavy North American focus means the portfolio is susceptible to regional economic cycles. Increasing exposure to other regions could enhance diversification and reduce geographic risk.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Technology Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 1.70%

The portfolio's dividend yield is not explicitly mentioned, but given the high concentration in growth-oriented ETFs, it is likely modest. Growth stocks typically reinvest earnings into the business rather than paying high dividends. While this supports capital appreciation, it may not be suitable for investors seeking regular income. Balancing growth with some income-generating assets might be worth considering.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is quite low and cost-effective. The individual ETFs have expense ratios ranging from 0.03% to 0.25%. Keeping costs low is crucial for maximizing net returns over the long term. This portfolio is well-optimized in terms of cost, making it efficient for long-term growth.

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