Growth-focused portfolio with high tech exposure and low diversification

Report created on May 31, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards technology, with significant positions in major tech companies and broad market ETFs. The inclusion of both the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF, which together make up 60% of the portfolio, alongside individual tech stocks, indicates a strong growth orientation but limited diversification. This structure suggests a focus on capitalizing on the growth potential of the tech sector, while the ETFs provide some level of market-wide exposure.

Growth Info

The portfolio has shown impressive historical performance, with a Compound Annual Growth Rate (CAGR) of 27.16%. However, it's crucial to remember that past performance is not indicative of future results. The significant drawdown of -59.47% highlights the portfolio's vulnerability to market volatility, particularly within the tech sector. This volatility underscores the importance of understanding one's risk tolerance and the potential for wide fluctuations in portfolio value.

Projection Info

Forward projections based on Monte Carlo simulations suggest a wide range of potential outcomes, emphasizing the portfolio's high-risk, high-reward nature. While the majority of simulations predict positive returns, the substantial variation between the 5th and 67th percentiles illustrates the uncertainty inherent in such a growth-focused strategy. Investors should consider whether this level of risk aligns with their financial goals and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to bonds, cash, or alternative asset classes. This allocation supports a high-growth strategy but comes with increased risk, especially during market downturns. Diversifying across different asset classes can help mitigate this risk while still allowing for significant growth potential.

Sectors Info

  • Technology
    49%
  • Consumer Discretionary
    11%
  • Telecommunications
    11%
  • Financials
    8%
  • Health Care
    7%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

The heavy emphasis on technology, accounting for nearly half of the portfolio, increases exposure to sector-specific risks. While the tech sector has historically provided substantial returns, it's also prone to rapid shifts in investor sentiment and regulatory changes. Balancing the sector allocation could reduce volatility without significantly compromising growth potential.

Regions Info

  • North America
    100%

With 100% of assets allocated to North America, the portfolio lacks international exposure. This geographic concentration can limit diversification benefits and may expose the portfolio to region-specific economic and political risks. Incorporating international investments could offer additional growth opportunities and risk mitigation.

Market capitalization Info

  • Mega-cap
    67%
  • Large-cap
    20%
  • Mid-cap
    11%
  • Small-cap
    2%

The focus on mega and big-cap stocks aligns with the portfolio's growth and risk profile, as these companies often have more stable earnings and stronger market positions. However, including medium, small, or micro-cap stocks could enhance diversification and potentially boost returns, as smaller companies sometimes outperform their larger counterparts over the long term.

Redundant positions Info

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

The high correlation between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF suggests redundancy in the portfolio, limiting diversification benefits. Reducing overlap by reallocating assets could improve the portfolio's risk-adjusted returns.

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.

Click on the colored dots to explore allocations.

Optimizing the portfolio using the Efficient Frontier concept could enhance the risk-return profile. This approach involves adjusting asset allocations to achieve the highest expected returns for a given level of risk. Given the current high correlation among some assets and the lack of diversification, there is significant room for optimization.

Dividends Info

  • Apple Inc 0.50%
  • Meta Platforms Inc. 0.30%
  • Microsoft Corporation 0.50%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 0.84%

The portfolio's dividend yield is modest, reflecting its focus on growth over income. For investors seeking cash flow, increasing exposure to higher-yielding assets could provide additional income without significantly altering the portfolio's growth trajectory.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.02%

The low total expense ratios (TERs) of the included ETFs are a positive aspect, helping to maximize long-term returns by minimizing costs. Keeping investment costs low is crucial for enhancing portfolio performance over time.

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