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

Report created on Dec 7, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a significant emphasis on growth. It allocates 60% to large-cap growth and S&P 500 ETFs, while the remaining 40% is spread across small-cap value, semiconductors, global equities, and tech sectors. This composition suggests a focus on capital appreciation, leveraging the performance of established and emerging companies. For investors, having a mix of growth and value strategies can provide a balanced approach to capturing market returns. However, concentrating heavily in specific sectors, like technology, might increase volatility. Consider diversifying further into other sectors or asset classes to mitigate sector-specific risks.

Growth Info

Historically, the portfolio has demonstrated strong performance with a CAGR of 20.01%, indicating robust growth potential. However, it's important to note the significant max drawdown of -33.85%, which highlights potential volatility. This performance metric serves as a reminder that while growth-focused portfolios can yield high returns, they also come with substantial risk. Investors should be prepared for potential downturns and ensure they have the risk tolerance to weather such periods. Regularly reviewing the portfolio's performance and adjusting allocations to align with risk tolerance and investment goals is advisable.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, using historical data to forecast future performance. With a median projection of 1,140.64% and a 5th percentile of 107.18%, the simulations suggest a high probability of positive returns, reflecting the growth focus of the portfolio. However, it's crucial to remember that these projections are based on past performance and assumptions, which may not hold in future market conditions. Investors should use these simulations as a guide, not a guarantee, and maintain a flexible investment strategy that can adapt to changing market dynamics.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with over 99% allocation, and minimal exposure to cash and other asset classes. This concentration in stocks aligns with a growth-oriented strategy, aiming for capital appreciation over the long term. While equities offer the potential for higher returns, they also come with increased volatility. Diversifying into other asset classes, such as bonds or real estate, could provide more stability and income generation, especially during market downturns. Consider gradually increasing exposure to other asset classes to achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    48%
  • Financials
    12%
  • Consumer Discretionary
    9%
  • Health Care
    7%
  • Industrials
    7%
  • Telecommunications
    7%
  • Energy
    4%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Technology dominates the sector allocation, comprising nearly 48% of the portfolio. This heavy concentration in tech reflects a strong belief in the sector's growth potential but also exposes the portfolio to sector-specific risks. Other sectors, like financial services and consumer cyclicals, have a smaller presence, providing some diversification. To enhance sector balance, consider increasing exposure to underrepresented sectors such as healthcare or energy. This can help mitigate the impact of any downturns in the tech sector and provide more stable returns across different economic cycles.

Regions Info

  • North America
    95%
  • Europe Developed
    3%
  • Asia Developed
    1%
  • Japan
    1%

Geographically, the portfolio is heavily skewed towards North America, with 94.7% exposure. This focus on the U.S. market can benefit from the country's economic strength but also limits exposure to international growth opportunities. A more geographically diversified portfolio could capture growth in emerging markets and reduce reliance on the U.S. economy. Consider increasing allocations to regions like Europe, Asia, or Latin America to diversify geographic risk and potentially enhance returns from global economic developments.

Redundant positions Info

  • iShares Factors US Growth Style ETF
    Vanguard Information Technology Index Fund ETF Shares
    High correlation
  • Vanguard S&P 500 ETF
    iShares MSCI World ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the iShares Factors US Growth Style ETF and the Vanguard Information Technology Index Fund ETF Shares. This correlation suggests that these assets tend to move in tandem, offering limited diversification benefits. While correlated assets can enhance returns during bull markets, they also increase risk during downturns. To improve diversification, consider replacing or reducing exposure to highly correlated assets with those that have lower correlations, thus spreading risk across different market conditions.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By analyzing the current asset allocation, adjustments can be made to enhance efficiency without necessarily changing the asset mix. This involves reallocating weights among existing holdings to achieve a more optimal balance between risk and return. While optimization focuses on maximizing returns for a given level of risk, it may not address other factors like diversification or sector exposure. Regularly revisiting the portfolio's allocation and making informed adjustments can help maintain an efficient investment strategy.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • VanEck Semiconductor ETF 0.40%
  • iShares Factors US Growth Style ETF 0.20%
  • iShares MSCI World ETF 1.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.81%

The portfolio's dividend yield stands at 0.81%, reflecting its growth-oriented nature. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. For investors seeking income, increasing exposure to higher-yielding assets could enhance cash flow. However, focusing on growth can still be advantageous for long-term wealth accumulation. If income becomes a priority, gradually incorporating dividend-focused ETFs or stocks could provide a balanced approach to achieving both growth and income objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • VanEck Semiconductor ETF 0.35%
  • iShares Factors US Growth Style ETF 0.25%
  • iShares MSCI World ETF 0.24%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, indicating relatively low costs compared to actively managed funds. Lower costs can significantly enhance long-term returns by reducing the drag on performance. However, it's essential to regularly review costs and ensure they align with the value provided by the investments. Consider periodically comparing TERs with similar funds to ensure competitiveness and explore opportunities to reduce costs further. Opting for lower-cost alternatives without compromising on investment goals can improve net returns over time.

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