A growth-focused portfolio with broad diversification yet high volatility risks

Report created on Mar 27, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards ETFs, with Vanguard Total Stock Market Index Fund ETF Shares and Vanguard Total International Stock Index Fund ETF Shares making up over two-thirds of the allocation. This structure provides a solid foundation for diversification, as ETFs typically spread investments across numerous stocks. However, the presence of individual stocks like Intel and Nio introduces concentration risk. Balancing ETFs and individual stocks can enhance diversification, but it's crucial to monitor the weight of single stocks to avoid overexposure. Consider reallocating some individual stock positions into diversified funds to maintain a balanced risk profile.

Growth Info

Historically, the portfolio has underperformed, with a negative CAGR of -3.46% and a maximum drawdown of -29.21%. This suggests significant volatility and potential for loss. Comparing this to a benchmark index, which generally shows positive growth, highlights the need for adjustments. Poor historical performance can be a result of market conditions or portfolio composition. To improve performance, consider reviewing the asset allocation and possibly increasing exposure to more stable, historically outperforming sectors or assets. Remember, past performance isn't indicative of future results, but it can inform strategic changes.

Projection Info

Monte Carlo simulations, which use historical data to forecast future outcomes, indicate a bleak outlook with an annualized return of -19.50%. These simulations suggest a high risk of continued underperformance. While simulations provide a range of potential outcomes, they rely on historical data, which may not predict future market conditions accurately. To improve projections, consider optimizing the portfolio to reduce volatility and increase expected returns. This might involve reallocating assets to those with better historical performance or lower correlation with current holdings.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

With 99% of assets in stocks, the portfolio lacks diversification across asset classes, which could mitigate risk. Stocks offer growth potential but also come with higher volatility. Diversifying into other asset classes, such as bonds or real estate, might reduce risk and improve stability. Asset class diversification can provide a buffer during market downturns, as different assets often react differently to economic changes. Consider gradually incorporating non-equity assets to create a more balanced and resilient portfolio.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    13%
  • Health Care
    11%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Telecommunications
    5%
  • Energy
    3%
  • Utilities
    3%
  • Basic Materials
    3%
  • Real Estate
    2%

The portfolio is tech-heavy, with 30% allocated to this sector. While technology offers growth prospects, it can be volatile, especially during economic downturns or interest rate hikes. The remaining allocation is spread across various sectors, providing some balance. However, the heavy tech weighting could expose the portfolio to sector-specific risks. To mitigate this, consider rebalancing to ensure no single sector dominates, thereby reducing volatility and enhancing stability. Diversifying sector exposure can help capture growth opportunities across different economic cycles.

Regions Info

  • North America
    62%
  • Europe Developed
    17%
  • Asia Emerging
    8%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio is predominantly focused on North America, with 62% exposure, followed by Europe and Asia. This geographic concentration might limit diversification benefits and expose the portfolio to regional economic risks. While North America has been a strong performer, increasing exposure to emerging markets could offer growth opportunities and reduce regional risk. Consider gradually diversifying geographic exposure to include more international markets, which can provide a hedge against regional downturns and capture global growth.

Market capitalization Info

  • Large-cap
    35%
  • Mega-cap
    31%
  • Mid-cap
    17%
  • Small-cap
    10%
  • Micro-cap
    6%

The portfolio has a balanced distribution across market capitalizations, with a focus on large and mega-cap stocks. These tend to be more stable and less volatile than small or micro-caps. However, small and micro-cap stocks can offer higher growth potential, albeit with increased risk. This balance provides a good mix of stability and growth. To optimize, ensure that the market cap allocation aligns with your risk tolerance and investment goals. Consider adjusting exposure to smaller caps if seeking higher growth, while maintaining a core of large-cap stability.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation
  • Vanguard Total International Stock Index Fund ETF Shares
    Vanguard International High Dividend Yield Index Fund ETF Shares
    High correlation

Highly correlated assets, such as the Schwab U.S. Large-Cap Growth ETF and Vanguard Total Stock Market Index Fund ETF Shares, may limit diversification benefits. Correlation measures how assets move in relation to each other; highly correlated assets tend to move together, which can increase portfolio volatility. To enhance diversification, consider reducing exposure to overlapping assets and introducing those with lower correlation. This can help smooth returns and reduce risk during market downturns, as less correlated assets may react differently to economic changes.

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 along the Efficient Frontier, which seeks the best risk-return ratio based on current assets. Despite the current portfolio's negative expected return, optimization suggests a potential return of 18.63% at a similar risk level. This involves reallocating assets to achieve the most efficient mix. Consider reducing exposure to highly correlated or underperforming assets and increasing allocation to those with better risk-adjusted returns. Efficient Frontier optimization helps ensure that each unit of risk taken is rewarded with the highest possible return.

Dividends Info

  • Intel Corporation 1.10%
  • PG&E Corp 0.30%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Schwab U.S. Large-Cap Value ETF 2.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Volkswagen AG 1/10 ADR 8.80%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.40%
  • Weighted yield (per year) 1.66%

The portfolio's total dividend yield is 1.66%, with contributions from several holdings like Vanguard International High Dividend Yield Index Fund ETF Shares. Dividends provide a steady income stream, which can be particularly beneficial in volatile markets. While growth-focused, maintaining a portion of dividend-paying assets can enhance overall returns and provide a cushion during downturns. Consider increasing exposure to high-yield assets if income is a priority, but ensure it aligns with your growth objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Large-Cap Value ETF 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) is impressively low at 0.03%, supporting better long-term performance by minimizing costs. Lower costs mean more of your returns are retained, enhancing compounding over time. This aligns well with best practices in portfolio management. While costs are already optimized, continue to monitor them, especially if reallocating assets. Keeping expenses low is crucial for maximizing net returns, particularly in a growth-focused portfolio where every basis point counts.

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