A growth-focused portfolio with high U.S. exposure and tech concentration

Report created on Feb 14, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of 90% stocks and 10% bonds, with a significant 50% allocation to the Vanguard S&P 500 ETF. This composition reflects a growth-oriented strategy, moderately diversified across asset classes. Compared to benchmark portfolios, this allocation leans heavily on equities, which may be suitable for investors with a higher risk tolerance. To enhance diversification, consider integrating more fixed-income or alternative asset classes to balance the equity dominance, especially during volatile market periods.

Growth Info

Historically, the portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 15.90%, though it experienced a maximum drawdown of -30.02%. This performance indicates strong growth potential but also highlights significant volatility. Compared to benchmarks, this volatility is typical for growth-focused portfolios. To manage risk, consider strategies to mitigate drawdowns, such as tactical asset allocation or incorporating defensive assets that can perform well in downturns.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, with a 5th percentile at -88.1% and a 50th percentile at 109.9%. These projections, based on historical data, offer insights into possible future performance but come with limitations; they cannot guarantee future results. To prepare for different market conditions, consider scenario planning and stress testing to understand how the portfolio might react to various economic environments.

Asset classes Info

  • Stocks
    90%
  • Bonds
    9%

The asset allocation is heavily skewed towards stocks, with 90% in equities and only 9% in bonds. This high equity exposure supports growth but can increase volatility. Compared to balanced benchmarks, this allocation is aggressive. To enhance stability, consider increasing bond exposure, which can act as a buffer during market downturns and provide steady income, potentially smoothing out returns over time.

Sectors Info

  • Technology
    27%
  • Industrials
    25%
  • Telecommunications
    16%
  • Consumer Discretionary
    8%
  • Financials
    7%
  • Health Care
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is concentrated in technology (27%) and industrials (25%), which may lead to higher volatility, especially during sector-specific downturns. Compared to common benchmarks, this concentration is above average. To mitigate sector risk, consider diversifying into underrepresented sectors like healthcare or consumer defensive, which can offer stability and reduce reliance on a few sectors for performance.

Regions Info

  • North America
    90%
  • Europe Developed
    10%

Geographically, the portfolio is heavily weighted towards North America (90%), with limited exposure to other regions. This concentration can increase vulnerability to regional economic downturns. Compared to global benchmarks, this allocation is less diversified. To enhance geographic diversification, consider adding exposure to Europe, Asia, or emerging markets, which can provide growth opportunities and reduce reliance on North American markets.

Market capitalization Info

  • Mega-cap
    35%
  • Mid-cap
    31%
  • Large-cap
    23%

The portfolio's market capitalization is well-distributed across mega (35%), medium (31%), and big (23%) companies. This spread aligns with diversification norms, offering a balance of stability from larger firms and growth potential from mid-sized companies. To further enhance diversification, consider adding small-cap stocks, which can offer higher growth potential, albeit with increased volatility.

Redundant positions Info

  • Vanguard Growth Index Fund ETF Shares
    Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard Growth Index Fund ETF Shares, Vanguard S&P 500 ETF, and Invesco NASDAQ 100 ETF. This correlation suggests limited diversification benefits, as these assets tend to move together. To improve diversification, consider replacing some of these with less correlated assets, which can help reduce overall portfolio risk and enhance stability during market fluctuations.

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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio. Currently, the high correlation among assets limits diversification benefits. By adjusting allocations, particularly among the highly correlated ETFs, the portfolio can achieve a more efficient balance between risk and return. This process helps ensure the portfolio is well-positioned to meet growth objectives while managing volatility.

Dividends Info

  • SHORT DURATION FUND R CLASS 3.40%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • Weighted yield (per year) 1.04%

The portfolio's dividend yield is modest at 1.04%, with the SHORT DURATION FUND R CLASS contributing the highest yield of 3.40%. For growth-focused investors, dividends may not be a primary concern, but they can offer a steady income stream and potential for reinvestment. To increase yield, consider adding high-dividend-paying stocks or funds, which can provide additional income and help balance growth with income generation.

Ongoing product costs Info

  • SHORT DURATION FUND R CLASS 1.07%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is low at 0.14%, which is favorable for long-term performance. Lower costs mean more of your returns are retained, enhancing compounding effects over time. This aligns well with best practices for cost efficiency. To maintain this advantage, regularly review and compare expense ratios to ensure the portfolio remains cost-effective, particularly as market conditions and available investment options evolve.

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