A tech-focused growth portfolio with low diversification and strong historical performance
Report created on Mar 1, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 60.00% -
FT Fidelity® MSCI Information Technology Index ETF
FTEC - US3160928087 40.00%
This portfolio primarily consists of two ETFs: Vanguard Total Stock Market Index Fund ETF Shares at 60% and Fidelity® MSCI Information Technology Index ETF at 40%. The heavy weighting towards these ETFs indicates a focus on U.S. equities, particularly in the technology sector. Compared to a balanced benchmark, this portfolio shows a limited diversification across asset classes and sectors. While this can lead to strong gains in favorable market conditions, it also increases vulnerability to sector-specific downturns. Consider diversifying across additional asset classes to reduce risk.
Growth
The historical performance of this portfolio has been strong, with a Compound Annual Growth Rate (CAGR) of 16.26%. This suggests substantial growth over time, outperforming many standard benchmarks. However, the maximum drawdown of -33.48% indicates significant volatility during market downturns. While past performance is not a guarantee of future results, it provides a reference point for understanding potential risks and rewards. Consider your comfort with this level of volatility and whether it aligns with your investment goals.
Projection
Using Monte Carlo simulations, which predict future outcomes based on historical data, this portfolio shows a promising forward projection. Out of 1,000 simulations, 999 resulted in positive returns, with an average annualized return of 18.40%. The 50th percentile projection shows a potential portfolio value increase of 750.9%. These projections, while encouraging, are based on past data and assumptions that may not hold in the future. Regularly reviewing and adjusting your portfolio in response to market changes can help manage risks.
Asset classes
- Stocks 100%
With 100% allocation to stocks, the portfolio lacks exposure to other asset classes like bonds or real estate, which can offer stability during market volatility. Diversification across asset classes can reduce risk and improve long-term returns. While a stock-heavy portfolio may yield high returns during bull markets, it also faces greater risk during downturns. Consider introducing other asset classes to enhance diversification and potentially smooth out returns over time.
Sectors
- Technology 59%
- Financials 8%
- Consumer Discretionary 7%
- Health Care 6%
- Industrials 5%
- Telecommunications 5%
- Consumer Staples 3%
- Energy 2%
- Real Estate 2%
- Utilities 1%
- Basic Materials 1%
The portfolio is heavily weighted towards technology, comprising 59% of the total allocation. This concentration can lead to higher returns during tech booms but also increases exposure to sector-specific risks, particularly during interest rate hikes or tech sector downturns. Other sectors, like financial services and healthcare, are underrepresented. Diversifying across a broader range of sectors could mitigate risk and provide more stable returns, aligning closer with diversified benchmarks.
Regions
- North America 99%
The geographic allocation is heavily skewed towards North America, with 99% exposure. This lack of international diversification may limit growth opportunities and increase vulnerability to regional economic downturns. Global diversification can reduce risk by spreading investments across different markets and economies. Consider incorporating international equities to capture growth in emerging and developed markets outside North America, offering a hedge against regional risks.
Market capitalization
- Mega-cap 45%
- Large-cap 29%
- Mid-cap 17%
- Small-cap 7%
- Micro-cap 2%
The portfolio is well-diversified across market capitalizations, with a significant focus on mega and big caps at 45% and 29%, respectively. This allocation provides stability and potential for growth, as larger companies tend to be more resilient during downturns. However, the limited exposure to small and micro caps may miss out on high-growth opportunities. Balancing exposure across all market caps can enhance growth potential while maintaining stability.
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 aims to achieve the best possible risk-return ratio by adjusting asset weights. This approach focuses on maximizing returns for a given level of risk, based solely on the current assets. By reallocating between the existing ETFs, the portfolio may achieve a more efficient balance, potentially improving returns without increasing risk. Regularly reviewing asset weights is key to maintaining optimal efficiency.
Dividends
- Fidelity® MSCI Information Technology Index ETF 0.50%
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Weighted yield (per year) 0.98%
The portfolio's total dividend yield is 0.98%, with contributions from both ETFs. While dividends provide a steady income stream, the yield is relatively low compared to portfolios with a focus on income. For growth-oriented investors, this yield may be sufficient, but those seeking higher income might consider adding dividend-focused investments. Balancing growth and income can help achieve a more comprehensive return strategy.
Ongoing product costs
- Fidelity® MSCI Information Technology Index ETF 0.08%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Weighted costs total (per year) 0.05%
The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is advantageous for long-term performance. Low costs mean more of your investment returns stay in your pocket rather than going towards fees. This cost efficiency supports better compounding over time, enhancing overall returns. Maintaining low costs should remain a priority, as high fees can significantly erode investment gains over the long term.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey