A growth-focused portfolio with strong US bias and significant tech sector exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a growth-oriented approach, moderate to high risk tolerance, and a long-term horizon. It emphasizes capital appreciation through significant equity exposure, particularly in the technology sector. Such an investor is likely comfortable with market volatility and willing to accept short-term risks for the potential of higher long-term returns. The limited geographic diversification indicates a preference for familiar markets, primarily the US.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    45.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    15.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    15.00%
  • SPDR Gold MiniShares
    GLDM - US98149E2046
    5.00%
  • iShares Core S&P Mid-Cap ETF
    IJH - US4642875078
    5.00%
  • SPDR S&P World ex US
    SPDW - US78463X8891
    5.00%
  • SPDR® Portfolio Emerging Markets ETF
    SPEM - US78463X5095
    5.00%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares
    VSS - US9220427184
    5.00%

The portfolio is heavily weighted towards equities, with a 94.5% allocation in stocks, and a minor allocation to gold. This composition leans towards a growth-oriented strategy, common for investors seeking capital appreciation over time. The heavy equity exposure suggests a higher risk tolerance, but also potential for higher returns. To enhance diversification, consider balancing with more fixed-income assets or alternative investments, which can reduce volatility and provide more stable returns during market downturns.

Growth Info

Historically, the portfolio has delivered strong returns with a Compound Annual Growth Rate (CAGR) of 15.64%. However, it also experienced a significant maximum drawdown of -32.17%, indicating potential vulnerability during market downturns. This performance, compared to benchmarks, shows a high-risk, high-reward profile. While past performance is not indicative of future results, it highlights the importance of risk management strategies, such as diversifying into less volatile asset classes or sectors to mitigate potential losses.

Projection Info

Forward projections using Monte Carlo simulations estimate a median potential growth of 357.06% over the investment horizon. Monte Carlo analysis uses historical data to simulate potential future outcomes, but it's important to remember that these are estimates and not guarantees. The simulations suggest a wide range of outcomes, emphasizing the need for a diversified approach to manage risks effectively. Consider periodic portfolio reviews to ensure alignment with long-term goals and risk tolerance.

Asset classes

  • Stocks
    95%
  • Other
    5%
  • Cash
    0%
  • Bonds
    0%
  • No data
    0%

The portfolio is concentrated in equities, with a small allocation to gold and negligible exposure to bonds. This asset class distribution may limit diversification benefits, as equities tend to move together during market shifts. Comparing to benchmarks, a more balanced allocation typically includes a mix of stocks, bonds, and alternative assets. Introducing more bonds or other non-correlated assets can help stabilize returns and reduce overall portfolio risk, especially during economic downturns.

Sectors

  • Technology
    40%
  • Financials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

With nearly 40% allocated to technology, the portfolio is heavily skewed towards this sector. While tech has driven recent market gains, it can also be volatile, especially during interest rate hikes or regulatory changes. Other sectors like financial services and consumer cyclicals have moderate representation, providing some balance. To reduce sector-specific risk, consider increasing exposure to underrepresented sectors, which can offer stability and growth opportunities in different market conditions.

Regions

  • North America
    81%
  • Europe Developed
    4%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly North American-focused, with over 80% exposure, which may limit the benefits of international diversification. While the US market has shown strong performance, global exposure can mitigate regional risks and capture growth in emerging markets. Consider increasing allocations to underrepresented regions like Europe or Asia to enhance diversification and potentially improve risk-adjusted returns, aligning more closely with global benchmarks.

Redundant positions

  • Vanguard S&P 500 ETF
    Vanguard Information Technology Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    High correlation
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares
    SPDR S&P World ex US
    High correlation

The portfolio contains highly correlated assets, particularly among US-based equity ETFs. High correlation means these assets tend to move in the same direction, reducing diversification benefits. During market downturns, this could lead to larger losses. To enhance diversification, consider substituting or adding assets with lower correlation to the existing portfolio, which can help manage risk and improve the overall stability of returns.

Dividends

  • iShares Core S&P Mid-Cap ETF 1.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR S&P World ex US 1.80%
  • SPDR® Portfolio Emerging Markets ETF 1.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.99%

The portfolio's dividend yield stands at 0.99%, which is relatively low for income-focused investors. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. While growth is a primary focus, consider incorporating higher-yielding assets to boost income potential. This can enhance cash flow and provide a buffer against market fluctuations, making the portfolio more resilient in various economic conditions.

Ongoing product costs

  • SPDR Gold MiniShares 0.10%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR S&P World ex US 0.03%
  • SPDR® Portfolio Emerging Markets ETF 0.07%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which supports better long-term performance by minimizing costs. Low costs are a significant advantage, as they allow more of the portfolio's returns to compound over time. Maintaining cost efficiency is crucial, so continue to monitor and compare fees across similar investment options. Consider replacing higher-cost funds with cheaper alternatives if they align with your investment strategy and goals.

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.

The portfolio could be optimized for a better risk-return ratio by addressing asset correlation. The current structure suggests potential for improvement, with an optimized portfolio offering a higher expected return of 16.64%. By removing or reducing highly correlated assets, you can achieve a more efficient portfolio on the Efficient Frontier, which balances risk and return more effectively. This optimization focuses on reallocating within existing assets rather than adding new ones.

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