A growth-focused portfolio with high tech exposure and limited geographic diversification

Report created on Jan 16, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a focus on large-cap U.S. stocks. The Vanguard S&P 500 ETF dominates at 50%, complemented by the Schwab U.S. Dividend Equity ETF and Vanguard Information Technology Index Fund ETF Shares, each at 25%. This composition is typical for growth profiles, but it lacks diversification across asset classes. While this can lead to significant gains in bullish markets, it also exposes the portfolio to higher volatility. Consider diversifying into other asset classes like bonds or alternative investments to balance risk.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 15.6%, outperforming many benchmarks. However, it has also experienced a significant maximum drawdown of nearly 33%, indicating vulnerability during market downturns. The concentrated nature of the portfolio means that a small number of trading days are responsible for most returns. While past performance is impressive, it's crucial to remember that it doesn't guarantee future results. Diversifying could help mitigate potential drawdowns in the future.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a promising outlook. With 1,000 simulations, the portfolio's median return is projected at 746.22%, and 997 simulations show positive returns. However, reliance on historical data means these results are not guaranteed. Consider using these projections as a guide rather than a certainty. Diversifying further could help stabilize returns across different market conditions, potentially improving the risk-return profile.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, with a negligible cash holding. This allocation aligns with a growth-focused strategy but limits the benefits of diversification. Diversifying across asset classes, such as including bonds or real estate, could provide a buffer against market volatility. A more balanced allocation would also align better with common benchmarks, which often include a mix of equities and fixed-income assets to optimize risk and return.

Sectors Info

  • Technology
    44%
  • Financials
    12%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Telecommunications
    6%
  • Energy
    5%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, making up nearly 44% of the allocation. While this sector has driven strong returns, it also subjects the portfolio to higher volatility, particularly if interest rates rise. Other sectors like financial services and healthcare provide some balance but remain underrepresented. Consider diversifying further across sectors to mitigate risks associated with sector-specific downturns and to better align with broader market benchmarks.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is almost entirely focused on North American equities, with minimal exposure to other regions. This lack of geographic diversification increases vulnerability to regional economic downturns. Expanding into international markets could enhance diversification and potentially capture growth opportunities in emerging markets. Consider gradually increasing exposure to regions such as Europe or Asia to balance the portfolio's geographic risk and align more closely with global benchmarks.

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 allocation could potentially be optimized using the Efficient Frontier to improve the risk-return ratio. This involves adjusting the weights of existing assets to achieve the best possible balance between risk and return. While the portfolio already shows strong historical performance, fine-tuning the asset allocation could enhance efficiency. Consider consulting with a financial advisor to explore optimization strategies that align with your investment goals and risk tolerance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.65%

The portfolio's dividend yield stands at 1.65%, primarily driven by the Schwab U.S. Dividend Equity ETF. While this provides some income, it is relatively modest for a growth-focused portfolio. Reinvesting dividends can enhance compounding effects over time, supporting long-term growth. If income generation is a priority, consider increasing exposure to higher-yielding assets. However, balance this with the need for growth to ensure the portfolio continues to meet its objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports long-term performance by minimizing costs. Low fees are a significant advantage, as they can compound over time, enhancing overall returns. This cost efficiency aligns with best practices in portfolio management. Continue to monitor expense ratios to ensure they remain competitive. If considering new investments, prioritize low-cost options to maintain this advantage.

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