A growth-focused portfolio with a heavy technology tilt and moderate geographic 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 is ideal for growth-oriented investors with a moderate to high risk tolerance and a long-term investment horizon. It prioritizes capital appreciation over income, making it suitable for those seeking significant growth potential. Investors comfortable with market volatility and sector concentration, particularly in technology, will find this portfolio aligns with their goals. It suits individuals aiming to build wealth over time, leveraging U.S. market strength while considering global diversification.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    50.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    20.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    20.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    10.00%

The portfolio consists of four ETFs, with Vanguard Total Stock Market Index Fund making up 50%, Invesco NASDAQ 100 ETF at 20%, VanEck Semiconductor ETF at 20%, and Schwab U.S. Large-Cap Growth ETF at 10%. This composition is heavily tilted towards U.S. equities, reflecting a focus on growth. Compared to a typical diversified portfolio, this one is concentrated in technology and large-cap stocks. While this can drive growth, it also increases exposure to sector-specific risks. To enhance diversification, consider introducing assets from different sectors or regions.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.93%, which is impressive compared to broader market benchmarks. However, the maximum drawdown of -32.73% indicates significant volatility, common in growth-focused portfolios. The large drawdown highlights the importance of understanding risk tolerance and the potential for substantial value fluctuation. To mitigate these risks, consider balancing the portfolio with more defensive assets that can provide stability during downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, shows a median projected growth of 375.9%. However, it also indicates a 5% chance of a -4.0% return, reflecting the uncertainty inherent in forecasting. While these simulations provide a range of possible outcomes, they are not guarantees. It's crucial to regularly review and adjust the portfolio based on changes in market conditions and personal financial goals to align with the desired risk-return profile.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is entirely composed of stocks, with no allocation to cash or bonds, which limits diversification across asset classes. This 100% equity exposure aligns with a high-risk, high-reward strategy but may not suit investors seeking stability. Diversifying into other asset classes, such as bonds or real estate, could reduce volatility and provide income during market downturns. By incorporating a broader range of asset classes, the portfolio can achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    50%
  • Consumer Discretionary
    9%
  • Telecommunications
    9%
  • Financials
    8%
  • Health Care
    8%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

With 50% of the portfolio in technology, there's a significant sector concentration. While technology has driven growth, it also introduces volatility, especially during periods of regulatory scrutiny or interest rate hikes. The remaining sectors, such as consumer cyclicals and healthcare, have smaller allocations. To mitigate sector-specific risks, consider diversifying into sectors like utilities or consumer staples, which often perform well during economic downturns, providing a buffer against tech volatility.

Regions Info

  • North America
    95%
  • Asia Developed
    2%
  • Europe Developed
    2%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

The portfolio's geographic allocation is heavily skewed towards North America at 95%, with minimal exposure to Asia and Europe. This concentration can limit benefits from global diversification. While the U.S. market has been strong, international markets, particularly emerging markets, offer growth opportunities and can provide a hedge against U.S. market downturns. Consider reallocating a portion of the portfolio to include more international equities to capture global growth and reduce regional risk.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    15%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 46% in mega-caps and 34% in big-caps. This focus on larger companies can provide stability and steady growth, but it may miss out on the higher growth potential of small-cap stocks. Small and micro-cap stocks, though riskier, often offer significant returns in growth phases. To balance this, consider increasing exposure to smaller market capitalizations, which can enhance portfolio growth potential and diversification.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio exhibits high correlation among some assets, particularly between the Invesco NASDAQ 100 ETF and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, this can amplify losses. To enhance diversification, consider replacing one of these ETFs with assets that have lower correlation to the rest of the portfolio, thereby spreading risk more effectively.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • VanEck Semiconductor ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 1.06%

The portfolio's overall dividend yield is 1.06%, with Vanguard Total Stock Market Index Fund contributing the highest yield at 1.50%. While dividends provide a steady income stream, this portfolio prioritizes growth over income. For investors seeking higher income, consider adding high-dividend ETFs or stocks. However, growth-oriented investors may find the current yield sufficient, given the focus on capital appreciation. Balancing growth with income can enhance total returns.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is a low 0.12%, which is commendable and supports better net returns over time. Keeping costs low is crucial in maximizing investment returns, as high fees can erode gains. This low TER aligns with best practices and ensures more of your money works for you. Regularly reviewing and comparing expense ratios can help maintain cost efficiency. Consider this a strong aspect of the portfolio that supports long-term growth.

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 could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This involves adjusting asset weights to enhance returns for a given level of risk. However, given the high correlation among some assets, diversification might be limited. Before optimizing, focus on reducing asset overlap to maximize diversification benefits. This approach can lead to a more efficient and resilient portfolio.

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