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

Report created on Jan 14, 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 comprises three ETFs, heavily weighted towards the Vanguard S&P 500 ETF at 50%, followed by the Vanguard Information Technology Index Fund ETF Shares at 30%, and the Schwab U.S. Dividend Equity ETF at 20%. The high allocation to U.S. equities, especially in technology, suggests a focus on growth. This composition aligns with a common growth strategy but lacks diversification across asset classes and regions. It's important to consider diversification to manage risk, potentially by incorporating other asset classes like bonds or international equities.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.9%. This suggests strong past returns, partly due to the significant exposure to the technology sector. However, the max drawdown of -32.93% indicates potential volatility. Comparing with benchmarks, this performance aligns with growth-focused portfolios but highlights the importance of risk management. While past performance is informative, it does not guarantee future results, so maintaining a diversified strategy is key to managing future risks.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential future outcomes, shows varied results. With an annualized return of 17.21% across simulations, the portfolio has a high probability of positive returns. However, it's crucial to remember that simulations are based on historical data and assumptions, which may not predict future market conditions. This projection underscores the portfolio's growth potential but also its inherent risks. Regularly reviewing and adjusting the portfolio can help align it with changing market dynamics and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with nearly 100% in equities and a negligible cash position. This concentration aligns with a high-risk, high-reward growth strategy but lacks the balance that other asset classes can provide. Incorporating bonds or other fixed-income assets could help mitigate volatility and provide more stability during market downturns. Diversifying across asset classes can enhance the portfolio's resilience and improve its risk-return profile.

Sectors Info

  • Technology
    48%
  • Financials
    11%
  • Health Care
    9%
  • Consumer Discretionary
    7%
  • Industrials
    6%
  • Consumer Staples
    6%
  • Telecommunications
    5%
  • Energy
    4%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio's sector allocation is heavily concentrated in technology, accounting for nearly half of the total. While this can drive growth, it also subjects the portfolio to sector-specific risks, such as regulatory changes or technological disruptions. Other sectors like financial services and healthcare are underrepresented compared to common benchmarks. Balancing sector exposure can reduce risk and provide more consistent returns, especially in volatile market conditions.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With over 99% of the portfolio's assets in North America, geographic diversification is limited. This concentration increases exposure to regional economic and political risks. Expanding geographic exposure to include more assets from Europe, Asia, or emerging markets could enhance diversification and reduce risk. Global diversification can provide opportunities for growth in different economic cycles and reduce reliance on any single region's performance.

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 be optimized along the Efficient Frontier, which represents the best possible risk-return combinations. Adjusting the current asset allocation could improve the portfolio's efficiency, potentially achieving higher returns for a given level of risk. This approach focuses on maximizing returns while managing risk. However, it's important to align any changes with personal investment goals and risk tolerance to ensure the portfolio remains suitable.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.55%

With a total dividend yield of 1.55%, the portfolio provides modest income, primarily through the Schwab U.S. Dividend Equity ETF. While dividends can enhance returns, the focus on growth suggests dividends are not the primary objective. For investors seeking income, increasing exposure to higher-yielding assets could be beneficial. However, balancing growth and income is crucial to meet long-term investment goals.

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%, supporting better long-term performance by minimizing costs. This aligns with best practices in cost management, ensuring more of the portfolio's returns are retained. Regularly reviewing and comparing fees can help maintain this cost efficiency. Consider replacing higher-fee assets with cost-effective alternatives to further enhance returns.

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