A growth-focused portfolio with high tech exposure and low international diversification

Report created on Jan 2, 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 notable concentration in large-cap U.S. stocks. ETFs such as the Vanguard S&P 500 and Schwab U.S. Large-Cap dominate, making up a significant portion. This composition aligns well with a growth strategy, yet it lacks diversification across asset classes. Compared to a typical benchmark, the portfolio is underweight in bonds and international equities. While this focus on U.S. equities can drive growth, it also increases vulnerability to domestic market fluctuations. To enhance stability, consider introducing more diverse asset classes like bonds or international stocks.

Growth Info

Historically, the portfolio has delivered impressive returns, with a CAGR of 16.82%. This performance surpasses many benchmarks, reflecting the strong bull market in U.S. equities, particularly in tech stocks. However, the max drawdown of -31.83% highlights the potential for significant losses during downturns. Historical performance is a useful gauge but not a guarantee of future results. To mitigate future drawdowns, consider diversifying into less volatile asset classes. Balancing growth with risk management is key to sustaining long-term performance.

Projection Info

A Monte Carlo simulation, which models potential future outcomes based on historical data, indicates a wide range of possible returns. The median projection suggests a 600.5% increase, while the worst-case scenario still shows positive growth. This suggests resilience but also underscores the uncertainty inherent in forecasting. While simulations offer guidance, they rely on past data and assumptions that may not hold. Regularly reviewing and adjusting your portfolio to align with changing market conditions and personal goals is crucial.

Asset classes Info

  • Stocks
    98%
  • Bonds
    1%
  • Other
    1%

The portfolio is predominantly composed of stocks, accounting for over 98% of the allocation. This heavy emphasis on equities is typical for growth-oriented portfolios but limits exposure to other asset classes like bonds or cash. Compared to diversified benchmarks, this allocation increases potential returns but also elevates risk. To mitigate volatility, consider incorporating more fixed-income securities or alternative investments. A balanced mix can provide a buffer during market downturns and enhance long-term stability.

Sectors Info

  • Technology
    47%
  • Telecommunications
    9%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Industrials
    5%
  • Consumer Discretionary
    4%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology is the dominant sector, comprising nearly 47% of the portfolio. This concentration can drive significant growth, especially during tech booms, but also increases susceptibility to sector-specific risks. Compared to benchmarks, the portfolio is underweight in sectors like utilities and real estate, which can offer stability. To reduce sector risk, consider diversifying into industries with different economic cycles. This approach can help cushion the portfolio against downturns in any single sector.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Developed
    1%

The portfolio's geographic allocation is heavily skewed towards North America, with over 95% exposure. This concentration limits diversification benefits from international markets, which can provide growth opportunities and risk mitigation. Compared to global benchmarks, there's minimal exposure to emerging markets. To enhance geographic diversification, consider increasing allocations to regions like Europe or Asia. This strategy can help capture growth in diverse economies and reduce reliance on U.S. market performance.

Redundant positions Info

  • SPDR® Portfolio S&P 500 ETF
    Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio contains several highly correlated assets, particularly among U.S. large-cap ETFs. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this can lead to amplified losses. To improve diversification, consider replacing some overlapping ETFs with those offering exposure to different asset classes or regions. This adjustment can enhance the portfolio's ability to withstand market volatility and improve overall risk management.

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 structure could benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio. By adjusting allocations among existing assets, you can potentially enhance returns for a given level of risk. However, focus first on addressing high correlations and sector concentrations. Optimization is a dynamic process, requiring regular reassessment to adapt to market changes and personal goals.

Dividends Info

  • FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 1.10%
  • Schwab Fundamental International Large Company Index ETF 4.00%
  • Microsoft Corporation 0.70%
  • Schwab Intermediate-Term U.S. Treasury ETF 4.40%
  • Schwab U.S. Large-Cap ETF 2.00%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.19%

The portfolio's dividend yield is modest at 1.19%, reflecting its growth orientation. While dividends can provide a steady income stream, they are not the primary focus here. Growth investors often prioritize capital appreciation over income. However, introducing higher-yielding assets could add a layer of stability and income, especially during volatile markets. Consider balancing growth with income-generating investments to support long-term wealth accumulation.

Ongoing product costs Info

  • FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 0.47%
  • Schwab Fundamental International Large Company Index ETF 0.25%
  • Schwab Intermediate-Term U.S. Treasury ETF 0.03%
  • Schwab U.S. Large-Cap ETF 0.03%
  • VanEck Semiconductor ETF 0.35%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.14%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.14%. This efficiency supports better long-term performance by minimizing the drag on returns. Low fees are a crucial advantage, especially when compounded over time. Maintaining this cost-efficiency is beneficial, but always look for opportunities to reduce fees further without compromising diversification or performance. Regularly reviewing fund expenses ensures alignment with your investment strategy.

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