Broadly diversified growth portfolio with strong historical performance but high correlation in tech-heavy investments

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 growth-oriented investors with a higher risk tolerance, seeking long-term capital appreciation. Such investors are typically comfortable with market volatility and have a long investment horizon, allowing them to ride out fluctuations. They prioritize growth over income and are willing to accept short-term losses for potential long-term gains. This investor type is often focused on building wealth over time, leveraging a diversified portfolio to capture market opportunities while managing risk through strategic asset allocation.

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 clear focus on stocks, accounting for over 99% of the allocation. It is designed for growth, with a moderate risk score of 5 out of 7, indicating a higher risk tolerance. The diversification classification is broadly diversified, with a score of 4 out of 5, suggesting a good spread across different sectors and geographies. This composition is suitable for investors looking to capitalize on long-term capital appreciation, but it also implies exposure to market volatility. Consideration for risk management and potential adjustments could enhance the portfolio's resilience.

Growth Info

Historically, this portfolio has shown impressive performance, with a compound annual growth rate (CAGR) of 16.44%. Despite a significant maximum drawdown of -34.65%, the portfolio has managed to recover and deliver strong returns. The concentration of returns over just 17 days underscores the importance of staying invested during volatile periods. This historical performance suggests that the portfolio has been effective in capturing market gains, though investors should be prepared for potential downturns. Regular monitoring and rebalancing could help maintain its performance over time.

Projection Info

Using a Monte Carlo simulation, which runs numerous random trials to predict future outcomes, the portfolio's potential growth is promising. With a hypothetical initial investment, the 50th percentile outcome suggests a substantial increase of 777.31%, while the annualized return across all simulations is 19.68%. Most simulations result in positive returns, indicating a high likelihood of future profitability. However, the wide range of outcomes also highlights the inherent uncertainty in market conditions. Investors should be aware of these projections as a guide, not a guarantee, and remain adaptable to changing market dynamics.

Asset classes Info

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

The portfolio is predominantly invested in stocks, with a negligible allocation to cash and other asset classes. This heavy stock allocation aligns with the growth objective, offering potential for significant capital appreciation. However, it also increases exposure to market volatility. A more balanced approach, incorporating other asset classes like bonds, could mitigate risk and provide stability during market downturns. While the current allocation may suit aggressive growth investors, those seeking a more conservative approach should consider diversifying further to manage risk effectively.

Sectors Info

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

Sector allocation reveals a strong bias towards technology, comprising over 35% of the portfolio. Other sectors like financial services, industrials, and consumer cyclicals are also represented, but to a lesser extent. This tech-heavy focus could lead to higher volatility, given the sector's sensitivity to market changes. While technology has driven past performance, diversification across a wider range of sectors could reduce risk and enhance stability. Investors might benefit from reviewing their sector exposure periodically to ensure alignment with their risk tolerance and market conditions.

Regions Info

  • North America
    72%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, accounting for over 72% of the allocation. While this reflects a focus on the robust US market, it also limits exposure to international growth opportunities. Europe, Asia, and other regions have smaller allocations, providing some diversification but not significantly impacting the overall geographic balance. Expanding investments in emerging markets or other regions could enhance diversification and capture global growth potential. Maintaining a geographic balance is crucial for mitigating regional risks and taking advantage of global economic trends.

Redundant positions Info

  • Technology Select Sector SPDR® Fund
    Vanguard Total International Stock Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio shows high correlations among several key assets, particularly those with a technology focus. This indicates that these investments tend to move in the same direction, limiting diversification benefits. While correlations can enhance returns during market upswings, they can also amplify losses during downturns. Reducing overlapping investments and introducing assets with lower correlations could improve diversification and risk management. Investors should regularly assess the correlations within their portfolio to ensure it aligns with their diversification goals and risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Technology Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield stands at 1.6%, with contributions from various ETFs. The highest yield comes from the Vanguard Total International Stock Index Fund ETF Shares at 3.0%, while others offer lower yields. Although dividends provide a steady income stream, the portfolio's growth focus suggests that capital appreciation is the primary goal. Investors seeking higher income might consider increasing their allocation to dividend-paying assets. Balancing growth and income is essential for achieving long-term financial objectives, and periodic reviews can help maintain this balance.

Ongoing product costs Info

  • 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%

Portfolio costs are relatively low, with a total expense ratio (TER) of 0.08%. This cost efficiency is crucial for maximizing returns, as high fees can erode investment gains over time. The individual ETFs have varying expense ratios, with the Schwab U.S. Large-Cap Growth ETF being the most cost-effective at 0.04%. Keeping investment costs low is a smart strategy, allowing more of the portfolio's returns to compound over time. Investors should continue to prioritize low-cost options and regularly review their portfolio to ensure expenses remain manageable.

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.

To optimize the portfolio, focus first on reducing the high correlation among tech-heavy assets, which limits diversification. By adjusting the allocation along the efficient frontier, investors can achieve a riskier or more conservative portfolio. A more aggressive approach may involve increasing exposure to high-growth sectors, while a conservative strategy might include adding bonds or other low-risk assets. This balance allows for greater control over risk and return, helping to align the portfolio with the investor's financial goals and risk tolerance.

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