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

Report created on Dec 29, 2024

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 U.S. equity ETFs, with a significant focus on large-cap and technology stocks. This allocation is typical for growth-focused portfolios, aiming to capture the potential for higher returns from established and innovative companies. However, it lacks diversification across asset classes and geographic regions, which could expose it to higher risk. Consider diversifying into other asset classes like bonds or international equities to balance potential returns with risk.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 17.23%, indicating robust growth over time. This performance surpasses many traditional benchmarks, reflecting the high returns associated with its tech-heavy composition. However, the portfolio also experienced a significant max drawdown of -31.97%, highlighting its vulnerability during market downturns. It's crucial to remember that past performance doesn't guarantee future results, and maintaining a diversified portfolio can help mitigate risks.

Projection Info

Monte Carlo simulations, which use historical data to forecast potential outcomes, suggest a wide range of future returns for this portfolio. The median projection of 848.68% indicates optimistic growth potential, but with a risk of less favorable outcomes. The simulations show a 19.95% annualized return, yet the inherent uncertainty underscores the importance of diversification to manage risk. Remember, these projections are based on historical trends and may not predict future performance accurately.

Asset classes Info

  • Stocks
    100%

This portfolio is almost entirely invested in stocks, with negligible allocations to cash and bonds. Such a high equity exposure aligns with growth objectives but may increase volatility and risk. Compared to diversified benchmarks, this portfolio lacks balance across asset classes. Introducing bonds or other fixed-income securities could provide stability and income, especially during market downturns. A more diversified allocation could enhance long-term resilience and reduce overall portfolio risk.

Sectors Info

  • Technology
    45%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Health Care
    8%
  • Financials
    7%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Utilities
    2%

The portfolio is heavily concentrated in the technology sector, comprising 45.46% of the total allocation. This concentration can drive significant growth but also introduces volatility, especially during periods of tech market corrections. Other sectors like consumer cyclicals and communication services are also represented but to a lesser extent. Balancing sector exposure by including more defensive sectors like utilities or consumer staples could reduce risk and enhance stability during market fluctuations.

Regions Info

  • North America
    97%
  • Asia Developed
    2%
  • Europe Developed
    1%

The portfolio's geographic allocation is predominantly focused on North America, accounting for 96.71% of its holdings. Such concentration limits exposure to global markets and may miss out on growth opportunities in emerging regions. Compared to global benchmarks, this portfolio is under-diversified geographically. Expanding investments into international markets, particularly in developed and emerging economies, could offer additional growth potential and reduce regional risk dependency.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio includes highly correlated assets like the Schwab U.S. Large-Cap Growth ETF and the Invesco NASDAQ 100 ETF. High correlation means these assets tend to move together, which can limit diversification benefits and increase risk during downturns. Reducing overlap by selecting assets with lower correlation could enhance diversification and improve the portfolio's risk-adjusted returns. Consider evaluating other sectors or asset classes to achieve a more balanced risk profile.

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 allocation can be optimized for a better risk-return ratio using the Efficient Frontier concept. This involves adjusting asset weights to achieve the highest possible return for a given level of risk. The optimal portfolio suggests an expected return of 23.23% with a risk level of 25.32%, indicating potential for higher efficiency. However, this requires careful consideration of asset correlations and risk tolerance. Optimization could enhance returns without increasing overall risk.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Small-Cap ETF 2.10%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.88%

The portfolio's total dividend yield is 0.88%, with contributions from ETFs like the Schwab U.S. Small-Cap ETF and Vanguard Total Stock Market Index Fund ETF Shares. While dividends provide a steady income stream, this yield is relatively low compared to income-focused portfolios. Investors seeking income might consider increasing exposure to higher-yielding assets. However, for a growth-focused strategy, reinvesting dividends can compound returns over time, aligning with long-term capital appreciation goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is impressively low and supports better long-term performance by minimizing costs. This low-cost structure is beneficial as it allows more of the portfolio's returns to be retained by the investor. Consider maintaining this cost efficiency by reviewing and potentially replacing any high-fee funds with similar low-cost alternatives. Keeping expenses low is a crucial strategy for maximizing net returns over time.

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