A growth-focused portfolio with high US exposure and significant tech concentration

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 an investor with a high-risk tolerance seeking aggressive growth. It is ideal for someone with a long-term investment horizon, willing to weather market volatility for the potential of substantial returns. The focus on US equities and technology suggests a preference for capital appreciation over income, making it suitable for individuals looking to build wealth over time rather than prioritize immediate income.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    41.49%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    40.27%
  • Vanguard Total World Stock Index Fund ETF Shares
    VT - US9220427424
    10.48%
  • Avantis® International Small Cap Value ETF
    AVDV - US0250728021
    4.59%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    3.16%

This portfolio is heavily weighted towards large-cap US equities, with a notable 41.5% in Vanguard S&P 500 ETF and 40.3% in Invesco QQQ Trust. The remaining allocations include global and emerging markets exposure through various ETFs. Compared to common benchmarks, this portfolio leans significantly towards growth assets, reflecting a higher risk profile. This composition supports a growth-oriented strategy but may benefit from increased diversification across asset classes to mitigate potential volatility.

Growth Info

Historically, the portfolio has demonstrated a strong CAGR of 18.66%, indicating robust growth over time. However, it experienced a maximum drawdown of -31.58%, highlighting its susceptibility to market downturns. When compared to benchmarks, the portfolio's performance aligns with aggressive growth strategies. While past performance is encouraging, it's important to remember that historical data does not guarantee future success. Maintaining a balanced approach can help manage potential risks.

Projection Info

Using Monte Carlo simulations, the portfolio's future projections show a wide range of potential outcomes, with a 50th percentile end value of 454.85%. This method leverages historical data to simulate various market scenarios, offering insights into possible returns. However, it's crucial to note that these simulations are based on past trends and may not account for unforeseen market shifts. Regularly reviewing and adjusting the portfolio can help navigate future uncertainties.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • Bonds
    0%
  • No data
    0%

The portfolio is overwhelmingly concentrated in stocks, with 99.7% allocated to equities. This heavy equity exposure suggests a focus on capital appreciation, aligning with a growth strategy. While this can drive significant returns, it also increases vulnerability to market volatility. Diversifying into other asset classes, such as bonds or alternative investments, could enhance stability and reduce risk during market downturns, offering a more balanced risk-return profile.

Sectors

  • Technology
    38%
  • Consumer Discretionary
    13%
  • Telecommunications
    11%
  • Financials
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

With 37.6% allocated to technology, the portfolio is heavily tech-focused, followed by consumer cyclicals and communication services. This sector concentration can lead to higher volatility, especially during tech market fluctuations. While tech has driven significant growth, diversifying into less represented sectors like utilities or real estate could provide stability and reduce reliance on the tech industry's performance, aligning closer with diversified benchmarks.

Regions

  • North America
    88%
  • Europe Developed
    4%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    1%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

The portfolio's geographic exposure is predominantly in North America at 88%, with limited allocations to other regions. This concentration may limit the benefits of global diversification, exposing the portfolio to regional economic risks. Expanding exposure to underrepresented areas such as Europe or Asia could enhance diversification and reduce geographic risk, aligning with more globally balanced benchmarks and potentially capturing growth opportunities in other markets.

Redundant positions

  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard Total World Stock Index Fund ETF and the Vanguard S&P 500 ETF. High correlation indicates that these assets tend to move together, which may limit diversification benefits. Reducing overlap by incorporating less correlated assets can enhance risk management and improve the portfolio's resilience during market downturns, providing a more robust investment strategy.

Dividends

  • Avantis® International Small Cap Value ETF 4.30%
  • Invesco QQQ Trust 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.16%

The portfolio's total dividend yield is 1.16%, with the highest yield from the Avantis® International Small Cap Value ETF at 4.3%. While dividends provide a steady income stream, the overall yield is modest, reflecting a focus on growth rather than income. Investors seeking higher income may consider increasing exposure to dividend-paying assets. However, it's important to balance income needs with the portfolio's growth objectives.

Ongoing product costs

  • Avantis® International Small Cap Value ETF 0.36%
  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Maintaining low costs is crucial for maximizing net returns over time. Regularly reviewing expense ratios and considering lower-cost alternatives can further enhance cost-effectiveness, ensuring that fees do not erode investment gains significantly.

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.

The portfolio's current asset allocation can be optimized using the Efficient Frontier, focusing on achieving the best risk-return ratio. However, before optimization, addressing the issue of highly correlated assets is essential to enhance diversification. By adjusting allocations, the portfolio can potentially achieve a more efficient balance, maximizing returns for a given level of risk. This approach ensures alignment with the investor's risk tolerance and financial goals.

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