A growth-oriented portfolio with high tech exposure and low geographic diversification

Report created on Jan 1, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards large-cap index funds and treasury funds, making up over 55% of the total composition. The rest is allocated to individual stocks, with a significant portion in technology companies. While this structure aligns with a growth-focused strategy, it lacks diversification across different asset classes. Typically, balanced portfolios might include a mix of equities, bonds, and alternative investments to spread risk. Consider broadening asset types to enhance stability and reduce potential volatility, especially during market downturns.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 32.12%, though it experienced a significant max drawdown of -36.22%. This indicates high volatility, typical of growth-focused investments. While past performance shows potential for substantial gains, it also highlights the risk of steep declines. Comparing to benchmarks, the high returns are appealing but come with increased risk. To mitigate this, consider incorporating more stable, income-generating assets to cushion against future downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future performance, indicates a bleak forecast with negative returns in most scenarios. Only 15 out of 1,000 simulations showed positive outcomes, with an average annualized return of -7.06%. This suggests the current asset mix may not be sustainable long-term. While simulations provide insight, they are not foolproof and should be part of broader decision-making. Reassess the portfolio's risk exposure and consider adjustments to improve resilience against market volatility.

Asset classes Info

  • Stocks
    72%

The portfolio is predominantly invested in stocks, accounting for over 72%, with negligible cash holdings. This concentration in equities aligns with a growth strategy but exposes the portfolio to higher market risks. Diversifying into other asset classes like bonds or real estate can reduce volatility and provide more balanced risk-adjusted returns. Common benchmarks typically suggest a more even distribution across asset classes to achieve better diversification and stability.

Sectors Info

  • Technology
    35%
  • Industrials
    13%
  • Financials
    5%
  • Health Care
    4%
  • Telecommunications
    3%
  • Consumer Discretionary
    3%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Consumer Discretionary
    1%
  • Utilities
    1%
  • Real Estate
    1%

There is a notable concentration in the technology sector, comprising over 34% of the portfolio. This high exposure can lead to significant volatility, especially during tech sector downturns or regulatory changes. While tech stocks have growth potential, consider balancing with other sectors like healthcare or consumer staples to reduce sector-specific risks. A diversified sector allocation can help stabilize returns and protect against market-specific shocks.

Regions Info

  • North America
    72%

The portfolio is heavily concentrated in North America, with over 72% exposure, and minimal investments in Europe, Asia, and Latin America. This geographic skew limits diversification benefits and increases vulnerability to regional economic shifts. Expanding exposure to international markets can provide growth opportunities and reduce reliance on the North American economy. A more balanced geographic allocation aligns with global benchmarks and enhances portfolio resilience.

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's current asset allocation suggests potential for optimization on the Efficient Frontier, which aims to maximize returns for a given level of risk. Adjusting asset weights could enhance the risk-return profile, but this requires careful consideration of each asset's contribution to portfolio risk. Efficient Frontier analysis focuses on existing assets, so adding new types of investments might be necessary for significant improvement. Regularly review and rebalance to maintain optimal efficiency.

Dividends Info

  • Fidelity Newbury Street Trust - Treasury Fund 4.10%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Transdigm Group Incorporated 5.90%
  • Weighted yield (per year) 1.63%

The portfolio's dividend yield is relatively low at 1.63%, with notable contributions from the Schwab U.S. Dividend Equity ETF and Transdigm Group. While growth is a priority, dividends can provide a steady income stream and reduce reliance on capital gains. Enhancing dividend exposure with higher-yielding assets can improve cash flow and offer some protection against market fluctuations, aligning with a more balanced growth-income strategy.

Ongoing product costs Info

  • Fidelity Newbury Street Trust - Treasury Fund 0.42%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.12%

The portfolio's costs are low, with a Total Expense Ratio (TER) of 0.12%, which is commendable. Low costs are beneficial as they preserve returns over the long term. This aligns well with best practices for cost efficiency, ensuring more of your investment gains remain in your pocket. Continue to monitor and maintain low-cost investments, as reducing fees can significantly impact overall portfolio performance.

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