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

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with a significant 30% allocation in the Schwab U.S. Large-Cap Growth ETF and 20% in the Vanguard S&P 500 ETF. The remaining assets are distributed among individual stocks, primarily in the technology sector. Compared to typical growth portfolios, this allocation leans heavily towards large-cap U.S. equities, with limited exposure to other asset classes. While this can drive growth, it may also increase vulnerability to market volatility. Consider diversifying further by including bonds or other asset classes to balance risk and reward.

Growth Info

Historically, the portfolio has shown impressive growth, with a Compound Annual Growth Rate (CAGR) of 25%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -42.51%. This suggests that while the portfolio has the potential for high returns, it may also experience substantial losses during market downturns. Comparing this performance to benchmarks such as the S&P 500 can provide additional context. Consider maintaining a long-term perspective to weather short-term fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns for this portfolio. With a median projection of 1,487.97% and an annualized return of 35.17%, the portfolio shows strong growth potential. However, the 5th percentile projection of -8.69% highlights the risk of negative returns. It's important to remember that past performance does not guarantee future results, and these projections are merely estimates. Regularly reviewing and adjusting the portfolio can help manage risk.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash allocation. This heavy equity exposure aligns with a growth investment strategy but limits diversification benefits. While stocks can offer high returns, they also come with increased risk. Comparing this allocation to a more diversified benchmark, such as a 60/40 stock-bond split, can illustrate potential benefits of adding fixed income or alternative assets. Consider diversifying into other asset classes to reduce volatility and enhance stability.

Sectors Info

  • Technology
    46%
  • Consumer Discretionary
    17%
  • Telecommunications
    11%
  • Industrials
    8%
  • Health Care
    6%
  • Financials
    6%
  • Consumer Staples
    2%
  • Energy
    2%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, accounting for 46.45% of the total allocation. While tech stocks can drive growth, they are also subject to higher volatility, especially during periods of regulatory changes or interest rate hikes. Other sectors, such as consumer cyclicals and communication services, are also represented but to a lesser extent. Balancing sector allocations can mitigate sector-specific risks. Consider exploring opportunities in underrepresented sectors to enhance diversification and reduce potential volatility.

Regions Info

  • North America
    90%
  • Asia Emerging
    10%

Geographically, the portfolio is predominantly focused on North America, with 89.79% of assets allocated there. This concentration can limit exposure to global markets and potentially miss out on growth opportunities elsewhere. The 10% allocation to Asia Emerging provides some diversification but is relatively small. Comparing geographic exposure to global benchmarks can highlight areas for potential adjustment. Consider increasing exposure to other regions to benefit from global economic trends and further diversify risk.

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 may benefit from optimization using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting the allocations among existing holdings, it's possible to enhance the portfolio's efficiency. This doesn't necessarily mean adding new assets but rather reallocating within the current selection to achieve a more favorable balance of risk and return. Regularly reviewing and rebalancing the portfolio can help maintain its optimal state.

Dividends Info

  • Alphabet Inc Class A 0.30%
  • Microsoft Corporation 0.70%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.72%

The portfolio's dividend yield is relatively low at 0.72%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. The Schwab U.S. Dividend Equity ETF contributes the most to the yield at 3.7%. For investors seeking income, increasing the allocation to dividend-paying stocks or funds could enhance cash flow. However, if growth remains the primary goal, maintaining the current focus on capital gains may be more appropriate.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.02%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, allowing more of the portfolio's gains to compound over time. Comparing these costs to industry averages can underscore the benefits of maintaining a low-cost structure. Continue to monitor costs and consider replacing high-fee assets with more cost-effective alternatives if necessary.

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