Broadly Diversified Growth Portfolio with Strong Technology Focus and Moderate Risk

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 higher risk tolerance, aiming for long-term capital growth. Such an investor is likely to have a longer investment horizon, allowing them to weather short-term market volatility. They prioritize growth over income and are comfortable with significant exposure to equities, particularly in the technology sector. This investor is also willing to accept higher drawdowns in exchange for the potential of higher returns.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    40.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    26.60%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    10.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    3.40%

The portfolio is composed of five ETFs with a significant allocation towards U.S. stocks. The Vanguard Total Stock Market Index Fund ETF Shares make up 40%, followed by the Vanguard S&P 500 ETF at 26.6%, and the Vanguard Total International Stock Index Fund ETF Shares at 20%. Additionally, there is a 10% allocation to the Invesco QQQ Trust and a smaller 3.4% allocation to the VanEck Semiconductor ETF. This mix indicates a strong emphasis on broad market exposure with a slight tilt towards technology and growth sectors.

Growth

Historically, this portfolio has shown a commendable performance with a Compound Annual Growth Rate (CAGR) of 13.21%. However, it has also experienced significant volatility, with a maximum drawdown of -33.32%. This means that while the portfolio has the potential for high returns, it can also suffer substantial losses during market downturns. The performance is driven by the high allocation to U.S. equities, particularly in the technology sector, which has seen robust growth over the past decade.

Projection

Using a Monte-Carlo simulation with 1,000 runs, the median expected return for this portfolio is 647.6%, with the 5th percentile at 109.38% and the 67th percentile at 960.97%. This simulation provides a range of potential outcomes based on historical data, helping to estimate future performance. The high number of simulations with positive returns (994 out of 1,000) suggests a favorable outlook, though the actual performance may vary based on market conditions.

Asset classes

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

The portfolio is heavily weighted towards stocks, comprising 99.21% of the total allocation, with minimal exposure to cash and other asset classes. This high concentration in equities aligns with the growth objective but also increases the portfolio's risk. Diversifying into other asset classes such as bonds or commodities could help mitigate risk and provide more stability during market fluctuations.

Sectors

  • Technology
    31%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is dominated by technology at 30.85%, followed by financial services at 12.60%, and healthcare at 10.71%. While this concentration in technology has driven strong past performance, it also exposes the portfolio to sector-specific risks. A more balanced sector allocation could help reduce risk and enhance long-term stability. Considering sectors like consumer defensives or utilities might provide better resilience during market downturns.

Regions

  • North America
    80%
  • Europe Developed
    9%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America, which accounts for 80.26% of the allocation. Europe Developed follows with 8.61%, and Japan with 3.31%. This heavy North American focus benefits from the strong performance of U.S. markets but may miss out on growth opportunities in other regions. Increasing exposure to emerging markets or other developed regions could enhance diversification and potentially improve returns.

Dividends

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.50%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield information is not provided, but given the high allocation to growth-oriented ETFs, it is likely to have a lower yield. Growth stocks typically reinvest earnings to fuel expansion rather than pay out dividends. For investors seeking income, incorporating dividend-focused ETFs or stocks could provide a more consistent income stream while still maintaining growth potential.

Ongoing product costs

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is quite low at 0.07%, which is excellent for cost efficiency. The Vanguard ETFs, in particular, have very low expense ratios, contributing to this low overall cost. Keeping investment costs low is crucial as it directly impacts net returns. While the current costs are optimal, it's essential to periodically review and ensure that any new additions to the portfolio maintain this cost efficiency.

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