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

Report created on Jan 25, 2025

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 heavily weighted towards stocks, making up 98% of the assets, with a significant portion invested in ETFs, particularly the Vanguard Total Stock Market Index Fund ETF Shares at 58.23%. This composition suggests a strong focus on broad market exposure with a tilt towards growth through individual stocks like Amazon and Apple. Compared to a typical benchmark, this portfolio leans heavily on U.S. equities, indicating a preference for domestic markets. While the composition supports growth, it may benefit from further diversification to manage risk better.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 14.95%. This is a robust performance, especially when considering the maximum drawdown of -30.50%, which highlights the volatility associated with growth-focused portfolios. Benchmarked against broader market indices, this performance is competitive, but it's crucial to remember that past performance does not guarantee future results. To maintain such returns, regular reviews and adjustments may be necessary, particularly during volatile market periods.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of potential returns, with a 50th percentile return of 1,257.6%. This indicates a strong likelihood of positive outcomes, with 993 out of 1,000 simulations showing gains. However, the reliance on historical data means these projections are not foolproof. It's essential to consider these projections as one of many tools in decision-making, ensuring that investment strategies remain flexible and adaptive to changing market conditions.

Asset classes Info

  • Stocks
    98%
  • No data
    2%

With 98% of the portfolio in stocks, there is minimal diversification across asset classes. This concentration can lead to higher volatility, particularly during market downturns. Compared to benchmark norms, which often include bonds and other asset classes, this portfolio is heavily skewed towards equities. To enhance diversification, consider incorporating other asset classes, such as bonds or real estate, which could provide stability and reduce overall portfolio risk during market fluctuations.

Sectors Info

  • Technology
    36%
  • Consumer Discretionary
    25%
  • Financials
    8%
  • Health Care
    7%
  • Telecommunications
    7%
  • Industrials
    5%
  • Consumer Staples
    4%
  • No data
    2%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    1%

The portfolio is technology-heavy, with 36% allocated to this sector. While this aligns with growth objectives, it could increase vulnerability to sector-specific downturns, such as those triggered by regulatory changes or tech bubble bursts. Compared to common benchmarks, this concentration is higher, suggesting a need for balance. Diversifying into other sectors, like healthcare or consumer goods, might mitigate risk and provide more stable returns over time, especially if tech sector volatility continues.

Regions Info

  • North America
    96%
  • No data
    2%
  • Europe Developed
    1%

Geographically, the portfolio is concentrated in North America, accounting for 96% of assets. This heavy reliance on the U.S. market limits exposure to international growth opportunities and may increase vulnerability to domestic economic downturns. Compared to global benchmarks, which typically have more balanced regional allocations, this portfolio could benefit from increased international diversification. Including more assets from Europe or emerging markets could enhance growth potential and reduce geographic risk.

Market capitalization Info

  • Mega-cap
    54%
  • Large-cap
    25%
  • Mid-cap
    14%
  • Small-cap
    4%
  • No data
    2%
  • Micro-cap
    1%

The portfolio's market capitalization is primarily in mega-cap stocks at 54%, with significant holdings in big and medium caps. This allocation provides stability but may limit exposure to the potentially higher returns of small and micro-cap stocks. Compared to benchmarks, there is a notable underweight in smaller market caps. Diversifying across market capitalizations can offer a balance between stability and growth, potentially enhancing overall portfolio performance.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Invesco QQQ Trust
    High correlation

The portfolio features highly correlated assets, particularly between the Invesco NASDAQ 100 ETF and Invesco QQQ Trust. This high correlation suggests limited diversification benefits, as these assets may move similarly during market changes. Reducing these overlaps by exploring other sectors or asset classes could enhance diversification and risk management. By selecting less correlated investments, the portfolio could better withstand market volatility and provide more consistent returns.

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 achieve a more efficient risk-return balance by addressing asset overlaps, particularly the highly correlated Invesco ETFs. Optimization using the Efficient Frontier suggests potential for a higher expected return of 73.66% at the same risk level. This involves reallocating existing assets to achieve the best possible risk-return ratio. However, it's important to remember that this optimization focuses on current assets and does not account for external market conditions or personal investment goals.

Dividends Info

  • Apple Inc 0.40%
  • Microsoft Corporation 0.70%
  • Invesco QQQ Trust 0.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Invesco PHLX Semiconductor ETF 0.60%
  • Fidelity® Government Money Market Fund 4.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.92%

The portfolio's dividend yield stands at 0.92%, with contributions from various assets, including the Vanguard Total Stock Market Index Fund ETF Shares at 1.20%. While dividends are not the primary focus of this growth-oriented portfolio, they can provide a steady income stream, particularly during market downturns. For investors seeking income, increasing the allocation to dividend-yielding stocks or funds could enhance returns. However, for pure growth objectives, maintaining the current focus on capital appreciation may be more suitable.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Invesco NASDAQ 100 ETF 0.15%
  • Invesco PHLX Semiconductor ETF 0.19%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is a low 0.05%, primarily due to the Vanguard Total Stock Market Index Fund ETF Shares' minimal fees. This low-cost structure is advantageous for long-term performance, as it maximizes net returns. Compared to typical portfolios, these costs are impressively low, supporting better long-term growth. Maintaining this cost efficiency is crucial, so regularly reviewing and minimizing expenses can further enhance the portfolio's return potential over time.

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