A growth-focused portfolio with heavy technology exposure and significant North American bias

Report created on Dec 7, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards ETFs, with a substantial 42.41% in the Vanguard S&P 500 ETF and 15.16% in the Invesco QQQ Trust. This allocation indicates a strong focus on broad market exposure, particularly large-cap U.S. equities. The significant position in ZoomInfo Technologies Inc., a single stock, represents a concentrated bet within the technology sector. Such concentration can amplify both potential returns and risks. Balancing this with more diversified holdings might reduce volatility. Consider reviewing the allocation to ensure it aligns with your long-term goals and risk tolerance, potentially adjusting to include more diverse asset types beyond U.S. equities.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 12.65%, which is quite robust. However, it has also experienced a maximum drawdown of -37.48%, indicating significant volatility. This suggests that while the portfolio has the potential for high returns, it is also susceptible to large losses during market downturns. Understanding these performance metrics is crucial for setting realistic expectations. To manage such volatility, consider diversifying further or incorporating more conservative assets that can provide stability during market fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a broad range of potential returns. With a 50th percentile projection of 457.86% and a 67th percentile of 787.57%, the portfolio shows strong potential for growth. However, the 5th percentile indicates a slight potential loss, emphasizing the inherent uncertainty in predictions. These simulations highlight the importance of maintaining a long-term perspective and preparing for various market conditions. Consider continuously reassessing your risk tolerance and investment horizon, ensuring they align with these projections.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly composed of stocks, accounting for nearly 100% of the allocation. This singular focus on equities can lead to significant exposure to market volatility. While stocks offer the potential for high returns, they also come with higher risks compared to other asset classes like bonds or real estate. Diversifying across different asset classes can help mitigate risks and provide more balanced growth. Consider introducing a mix of fixed income or alternative investments to cushion against equity market swings and enhance overall portfolio stability.

Sectors Info

  • Technology
    54%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Health Care
    7%
  • Financials
    7%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio has a pronounced concentration in the technology sector, comprising over 53% of the total allocation. While technology has been a strong performer historically, this heavy weighting can increase susceptibility to sector-specific downturns. Other sectors like consumer cyclicals and communication services are also represented but to a lesser extent. A more balanced sector allocation can help reduce risk and provide exposure to different economic cycles. Consider redistributing some investments to underrepresented sectors to achieve a more diversified sectoral exposure.

Regions Info

  • North America
    96%
  • Europe Developed
    2%
  • Japan
    1%

Geographically, the portfolio is heavily skewed towards North America, with over 95% allocation. This regional concentration can limit exposure to international growth opportunities and increase vulnerability to U.S. market fluctuations. While the U.S. market has been a strong performer, global diversification can offer additional growth prospects and reduce risk. Exploring investments in emerging markets or other developed regions could enhance geographic diversification. Consider gradually increasing exposure to international markets to capture global economic trends and reduce reliance on North American performance.

Redundant positions Info

  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    iShares MSCI EAFE ETF
    High correlation
  • Vanguard S&P 500 ETF
    iShares Core S&P Total U.S. Stock Market ETF
    High correlation
  • Schwab U.S. Large-Cap Growth ETF
    Invesco QQQ Trust
    High correlation

The portfolio contains several highly correlated assets, such as the Vanguard S&P 500 ETF and the iShares Core S&P Total U.S. Stock Market ETF. High correlation means these assets tend to move in the same direction, offering limited diversification benefits. This could amplify risk during market downturns. Diversification aims to include assets that behave differently under various market conditions. Consider reducing exposure to overlapping assets and introducing investments with low correlation to the existing holdings, which can help smooth out returns and manage risk more effectively.

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.

Optimization using the Efficient Frontier suggests that the portfolio can achieve a better risk-return ratio. By removing overlapping, highly correlated assets, the portfolio could reach an expected return of 18.57% with a similar risk level. The Efficient Frontier represents the best possible combination of assets to maximize returns for a given risk level. Consider rebalancing the portfolio to align with these principles, prioritizing diversification and efficient asset allocation. This may involve adjusting existing positions rather than introducing new assets, focusing on maximizing efficiency with current holdings.

Dividends Info

  • Global X Artificial Intelligence & Technology ETF 0.20%
  • Global X Robotics & Artificial Intelligence ETF 0.10%
  • First Trust NASDAQ Cybersecurity ETF 0.40%
  • iShares MSCI EAFE ETF 2.90%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 1.10%
  • iShares Core S&P Total U.S. Stock Market ETF 1.20%
  • VanEck Uranium+Nuclear Energy ETF 3.50%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard Consumer Staples Index Fund ETF Shares 2.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.77%

The portfolio's overall dividend yield is relatively low at 0.77%, with the highest individual yield coming from the VanEck Uranium+Nuclear Energy ETF at 3.5%. While dividends can provide a steady income stream, the current yield suggests a focus on growth over income. For investors seeking income, increasing exposure to higher-yielding assets might be beneficial. Consider balancing growth-oriented investments with dividend-paying stocks or ETFs to enhance income generation. This approach can offer a more stable cash flow while still participating in potential capital appreciation.

Ongoing product costs Info

  • Global X Artificial Intelligence & Technology ETF 0.68%
  • Global X Robotics & Artificial Intelligence ETF 0.68%
  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • iShares MSCI EAFE ETF 0.33%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 0.57%
  • iShares Core S&P Total U.S. Stock Market ETF 0.03%
  • VanEck Uranium+Nuclear Energy ETF 0.61%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Consumer Staples Index Fund ETF Shares 0.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.08%

The total expense ratio (TER) of the portfolio is 0.08%, which is quite low, indicating cost-efficient investment choices. However, some ETFs, like the Global X Artificial Intelligence & Technology ETF, have higher individual expense ratios. Reducing costs can significantly impact long-term returns, as fees compound over time. Regularly reviewing and potentially replacing high-cost funds with lower-cost alternatives can enhance net returns. Consider focusing on maintaining low-cost investments, ensuring that any higher-cost options provide sufficient value to justify their expense.

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