Balanced Growth Portfolio with Strong Tech Focus and Moderate Geographic Diversification

Report created on Dec 3, 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 consists of a mix of individual stocks and ETFs, with a strong emphasis on tech giants like Apple, Amazon, and Microsoft. This composition highlights a preference for growth-oriented investments, given the significant allocation to companies with high growth potential. The inclusion of ETFs provides some level of diversification, but the portfolio remains heavily tilted towards individual stocks. To enhance diversification, consider increasing the allocation to ETFs or adding other asset classes like bonds, which can provide stability and reduce overall risk.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.81%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -43.17%. This means that while the portfolio has the potential for high returns, it also comes with substantial risk. To mitigate this risk, consider diversifying further across different sectors or asset classes. This could help smooth out returns over time and reduce the impact of market downturns on the portfolio's overall performance.

Projection Info

Using a Monte Carlo simulation, which models a range of potential future outcomes, the portfolio shows a wide range of possible returns. With a hypothetical initial investment, the median expected return is 440.42%, while the 5th percentile indicates a potential loss of -35.7%. This suggests the portfolio has a high potential for growth but also carries significant downside risk. To improve the risk-return profile, consider adjusting the asset allocation to include more defensive assets, which can help cushion against potential losses in adverse market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, with an overwhelming 99.99% allocation, leaving negligible room for other asset classes like bonds or cash. This heavy stock concentration suggests a high-risk, high-reward investment strategy. While this approach may be suitable for a growth-focused investor, it could benefit from a more balanced asset class distribution. Introducing bonds or cash equivalents could provide stability and liquidity, helping to mitigate risk and potentially enhance the portfolio's overall resilience during market fluctuations.

Sectors Info

  • Consumer Discretionary
    51%
  • Technology
    24%
  • Financials
    10%
  • Telecommunications
    8%
  • Industrials
    3%
  • Health Care
    2%
  • Consumer Staples
    1%
  • Energy
    1%

Sector allocation reveals a significant concentration in consumer cyclicals and technology, making up more than 75% of the portfolio. This concentration indicates a strong belief in the growth potential of these sectors. However, it also increases vulnerability to sector-specific downturns. To reduce this risk, consider diversifying into underrepresented sectors like healthcare, utilities, or real estate. This broader sector exposure can help balance the portfolio, potentially providing more consistent returns across varying economic cycles and reducing reliance on a few high-growth sectors.

Regions Info

  • North America
    85%
  • Asia Emerging
    15%

Geographically, the portfolio is heavily weighted towards North America, with 84.93% of its assets allocated there, and a significant 15% in Asia Emerging. This indicates a focus on established and fast-growing markets. However, the limited exposure to other regions like Europe or Latin America suggests an opportunity for further geographic diversification. By broadening the geographic allocation, the portfolio can better capture growth opportunities in different parts of the world and reduce the impact of region-specific risks, enhancing overall portfolio stability and potential 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 can be optimized for better performance by adjusting along the efficient frontier. Currently, it offers a decent return but with potential for improvement. By reallocating assets, the expected return could be increased to 53.63% while maintaining the same risk level. To achieve a riskier portfolio, consider increasing exposure to high-growth assets. Conversely, for a more conservative approach, incorporate more bonds or defensive stocks. This strategic adjustment can enhance the portfolio's efficiency, aligning it better with the investor's risk-return preferences.

Dividends Info

  • Apple Inc 0.40%
  • Alibaba Group Holding Ltd 3.20%
  • Bank of America Corp 1.60%
  • Southwest Airlines Company 2.20%
  • Meta Platforms Inc. 0.30%
  • Microsoft Corporation 0.50%
  • Schwab U.S. Small-Cap ETF 2.10%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.91%

The portfolio offers a modest total dividend yield of 0.91%, with contributions from various stocks and ETFs like Schwab U.S. Dividend Equity ETF and Bank of America. While dividends provide a steady income stream, the yield is relatively low, reflecting the portfolio's growth orientation. To enhance income generation, consider increasing exposure to high-dividend-yielding assets or funds. This could provide a more balanced approach, combining growth potential with income, which can be particularly beneficial in volatile markets or during periods of low capital appreciation.

Ongoing product costs Info

  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.01%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.01% across its ETFs. This cost efficiency is advantageous, as it helps maximize net returns over time. Keeping investment costs low is a smart strategy, as high fees can erode returns, especially in volatile markets. Continue to monitor and manage costs by selecting low-cost ETFs and funds. Additionally, consider reviewing any potential hidden costs, such as transaction fees or taxes, to ensure the portfolio remains as cost-effective as possible, further enhancing overall returns.

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