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A tech-heavy growth portfolio with significant S&P 500 exposure and limited global diversification

Report created on Apr 22, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up 66.25% of the total. NVIDIA Corporation accounts for 24%, indicating a strong individual stock position. The Technology Select Sector SPDR® Fund and two smaller ETFs round out the portfolio. This composition suggests a focus on U.S. large-cap equities, with a single stock concentration. While the S&P 500 offers broad market exposure, the high allocation to one stock may increase risk. Consider diversifying with additional ETFs or stocks to reduce reliance on a single equity and improve the portfolio's risk profile.

Growth Info

Historically, the portfolio has performed impressively, with a Compound Annual Growth Rate (CAGR) of 25.71%. This growth rate indicates strong returns, although the portfolio has also experienced a significant max drawdown of -41.62%. This suggests that while the portfolio can deliver high returns, it is also susceptible to substantial losses during downturns. Comparing this performance to a benchmark like the S&P 500 can provide additional context. To mitigate risk, consider strategies that balance growth with stability, such as incorporating more defensive assets.

Projection Info

Monte Carlo simulations, which predict future outcomes based on historical data, suggest a wide range of potential returns. The median projection indicates a potential growth of 1,256.5%, with most simulations showing positive returns. However, it's important to note that these are just projections and not guarantees. While the simulations are promising, consider diversifying to protect against unexpected market shifts. Remember that past data may not always predict future performance, and maintaining flexibility in your strategy can be beneficial.

Asset classes Info

  • Stocks
    97%
  • Cash
    3%

The portfolio is predominantly composed of stocks, accounting for 97% of the allocation, with cash making up the remaining 3%. This heavy stock allocation aligns with a growth-focused strategy but may expose the portfolio to higher volatility. A more balanced allocation across asset classes, such as including bonds or other fixed-income securities, could offer better risk management. This approach can help stabilize returns during market downturns, providing a cushion against potential losses.

Sectors Info

  • Technology
    49%
  • Financials
    10%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    1%

The portfolio is significantly concentrated in the technology sector, which constitutes 49% of the total allocation. While this sector has driven substantial growth, it also introduces higher volatility, especially in times of regulatory changes or market shifts. The remaining sectors are more evenly distributed, but none exceed a 10% allocation. To mitigate sector-specific risks, consider diversifying across additional sectors. This could help balance the portfolio and reduce vulnerability to sector-specific downturns.

Regions Info

  • North America
    97%

Geographically, the portfolio is overwhelmingly focused on North America, with 97% of assets allocated there. This lack of international exposure may limit diversification benefits and expose the portfolio to regional economic fluctuations. Consider incorporating global equities to enhance diversification and potentially capture growth in other regions. Adding exposure to developed markets in Europe or Asia could reduce reliance on the U.S. market and improve the portfolio's resilience against local economic downturns.

Market capitalization Info

  • Mega-cap
    57%
  • Large-cap
    24%
  • Mid-cap
    15%

The portfolio is primarily invested in mega and big-cap stocks, which together make up 81% of the allocation. This focus on larger companies provides stability but may limit exposure to high-growth opportunities found in smaller-cap stocks. Medium-cap stocks represent 15%, while small and micro-cap stocks are absent. Consider a more balanced approach by including small-cap stocks, which can offer greater growth potential and enhance diversification. This strategy can improve the portfolio's overall risk-return profile.

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.

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The portfolio could be optimized for a better risk-return ratio using the Efficient Frontier concept, which identifies the best possible allocation for a given level of risk. Currently, the portfolio's expected return could be improved by reallocating assets. While the optimal portfolio suggests a higher return, it also indicates a lower risk level. Consider adjusting allocations to align more closely with the Efficient Frontier, enhancing the portfolio's efficiency and potentially improving returns without increasing risk.

Dividends Info

  • iShares® 0-3 Month Treasury Bond ETF 4.80%
  • Vanguard Mid-Cap Index Fund ETF Shares 1.70%
  • Vanguard S&P 500 ETF 1.50%
  • Technology Select Sector SPDR® Fund 0.80%
  • Weighted yield (per year) 1.22%

The portfolio's dividend yield is relatively low at 1.22%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, they are less critical for growth investors who prioritize capital appreciation. If income is a priority, consider incorporating higher-yielding assets. However, for those focused on growth, the current yield is acceptable. It's important to align the dividend strategy with your broader investment goals, ensuring it complements your overall financial objectives.

Ongoing product costs Info

  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Mid-Cap Index Fund ETF Shares 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) is impressively low at 0.03%, which supports better long-term performance by minimizing costs. This is a positive aspect, as keeping costs down can significantly impact net returns over time. Regularly reviewing expense ratios and seeking cost-effective investment options can further enhance returns. Maintaining a low-cost structure is crucial for maximizing the compounding effect of investments, especially in a growth-focused portfolio.

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