Portfolio with High Tech Exposure and Moderate Diversification Suitable for Growth-Oriented Investors with Moderate Risk Appetite

Report created on Dec 4, 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 heavily weighted in technology stocks, with Taiwan Semiconductor Manufacturing and the Fidelity® MSCI Information Technology Index ETF making up nearly half of the total allocation. This concentration indicates a strong belief in the tech sector's growth potential. While tech can offer high returns, it also comes with increased volatility. It's important to balance this with investments in other sectors to mitigate risk. Diversifying into non-tech sectors could help stabilize returns during market downturns, ensuring a more resilient portfolio over time.

Growth Info

Historically, this portfolio has demonstrated impressive growth, with a compound annual growth rate (CAGR) of 27.39%. However, it also experienced a significant max drawdown of -37.46%, highlighting its vulnerability during market downturns. Such performance suggests a high-risk, high-reward strategy. It's crucial to consider whether this level of volatility aligns with your financial goals and risk tolerance. If the drawdown is too steep for comfort, reallocating some assets to more stable investments could provide a buffer against future market fluctuations.

Projection Info

A Monte Carlo simulation, which uses random sampling to model the probability of different outcomes, was conducted with 1,000 simulations. The results show a wide range of potential outcomes, with a 50th percentile end value of 2,249.72% and a 67th percentile of 4,214.4%. This indicates a strong potential for growth but also underscores the uncertainty inherent in investing. Understanding these projections can help set realistic expectations and guide future investment decisions. Consider adjusting the portfolio to better align with your risk tolerance and expected returns.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible amount allocated to cash and other assets. While stocks can offer substantial growth, they can also be volatile. A more balanced portfolio might include bonds or other fixed-income securities to provide stability and income. This could help cushion the impact of market downturns and reduce overall volatility. Diversifying across different asset classes can also enhance risk-adjusted returns, making the portfolio more resilient to economic fluctuations.

Sectors Info

  • Technology
    59%
  • Consumer Staples
    11%
  • Financials
    8%
  • Industrials
    7%
  • Health Care
    4%
  • Telecommunications
    4%
  • Consumer Discretionary
    3%
  • Energy
    2%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

Technology dominates the sector allocation, comprising over 59% of the portfolio. While this reflects confidence in the sector's growth, it also exposes the portfolio to sector-specific risks. Other sectors like Consumer Defensive and Financial Services have smaller allocations, offering some diversification. To reduce risk, consider increasing exposure to sectors that are less correlated with technology. This could help mitigate losses when tech stocks underperform and provide more consistent returns across different market conditions.

Regions Info

  • North America
    60%
  • Asia Emerging
    31%
  • Europe Developed
    6%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is concentrated in North America and Asia Emerging, with limited exposure to other regions. This concentration can lead to regional risk, especially if economic or political events negatively impact these areas. Increasing geographic diversification by adding investments from Europe, Japan, or other regions could reduce this risk and provide exposure to different economic cycles. A more globally diversified portfolio can enhance returns and reduce volatility, making it more resilient to regional downturns.

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 has room for optimization by adjusting along the efficient frontier, which represents the set of optimal portfolios offering the highest expected return for a defined level of risk. To achieve a riskier portfolio, consider increasing allocations to high-growth stocks or sectors. Conversely, to make the portfolio more conservative, increase exposure to bonds or other fixed-income securities. Before making changes, ensure that adjustments align with personal risk tolerance and investment goals, as the current portfolio already reflects a growth-oriented strategy.

Dividends Info

  • Apple Inc 0.40%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Costco Wholesale Corp 2.00%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Alphabet Inc Class A 0.20%
  • Johnson & Johnson 2.40%
  • Mastercard Inc 0.50%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.16%

The portfolio yields a total dividend of 1.16%, with contributions from various holdings like Johnson & Johnson and Vanguard Total International Stock Index Fund ETF Shares. While dividends provide a steady income stream, the yield is relatively low compared to more income-focused portfolios. If generating income is a priority, consider increasing allocations to higher-yielding assets. This could involve adding dividend-focused funds or stocks with a history of stable payouts, enhancing the portfolio's income potential.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's costs are quite low, with an overall Total Expense Ratio (TER) of 0.04%. This is advantageous, as lower costs can significantly improve net returns over time. Keeping investment costs low is a crucial aspect of portfolio management. However, it's important to ensure that low costs don't come at the expense of diversification or quality. Regularly reviewing and optimizing costs can help maintain a cost-effective portfolio without sacrificing performance or diversification.

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