A growth-focused portfolio with significant technology exposure and moderate geographic diversification

Report created on Dec 7, 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 composed of three ETFs, with a strong emphasis on growth. The iShares Factors US Growth Style ETF and Vanguard S&P 500 ETF each hold a 40% stake, while the VanEck Semiconductor ETF makes up the remaining 20%. This composition indicates a focus on growth-oriented equities, particularly in the technology sector. The reliance on ETFs offers broad market exposure and liquidity. However, the lack of asset class diversification could increase vulnerability to market fluctuations. Diversifying into other asset classes like bonds or real estate could potentially balance risk and reward.

Growth Info

Historically, the portfolio has delivered an impressive compound annual growth rate (CAGR) of 21.25%, indicating strong performance in previous years. However, it also experienced a significant maximum drawdown of -32.36%, reflecting periods of high volatility. While past performance can provide insights, it's not a guaranteed indicator of future results. Investors should be prepared for fluctuations and consider strategies to mitigate potential downturns, such as rebalancing or incorporating more defensive assets.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, suggests a wide range of future returns. With a median return projection of 1,469.86% and a 5th percentile return of 142.02%, the portfolio shows potential for substantial growth but also significant risk. While 995 out of 1,000 simulations resulted in positive returns, it's important to recognize the limitations of such models. They rely on historical data that may not account for future market changes, so maintaining a flexible strategy is crucial.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with a negligible cash position. This allocation reflects a high-risk, high-reward strategy typical of growth-focused portfolios. While equities can offer substantial returns, they also expose investors to market volatility. Introducing other asset classes, such as fixed income or commodities, could enhance diversification and provide a buffer against stock market downturns. A more balanced asset allocation could help achieve a more stable risk-return profile.

Sectors Info

  • Technology
    53%
  • Financials
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Health Care
    8%
  • Industrials
    5%
  • Energy
    2%
  • Consumer Staples
    2%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation reveals a significant concentration in technology, comprising over half of the portfolio. While this sector can drive growth, it also introduces sector-specific risks, such as regulatory changes or technological disruptions. Other sectors, like financial services and consumer cyclicals, are present but less prominent. To reduce sector-specific risks, consider diversifying into sectors with lower representation, such as healthcare or energy, which could offer stability and long-term growth potential.

Regions Info

  • North America
    95%
  • Asia Developed
    3%
  • Europe Developed
    2%

The portfolio is predominantly exposed to North America, accounting for over 95% of geographic allocation. While this focus can benefit from the stability and growth of US markets, it limits exposure to international opportunities. Expanding geographic diversification to include more developed and emerging markets could provide access to different economic cycles and growth drivers. This geographic balance can help mitigate risks associated with regional economic downturns or political events.

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.

Optimization using the Efficient Frontier suggests that the portfolio could achieve a better risk-return ratio by adjusting the current asset allocation. This approach focuses on maximizing returns for a given level of risk. By reallocating assets within the existing ETFs, investors can potentially enhance portfolio efficiency. It's important to note that optimization doesn't necessarily improve diversification but aims to achieve the best possible performance based on current holdings.

Dividends Info

  • VanEck Semiconductor ETF 0.40%
  • iShares Factors US Growth Style ETF 0.20%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.64%

The portfolio's dividend yield stands at 0.64%, with the Vanguard S&P 500 ETF contributing the most. While dividends are not the primary focus of a growth-oriented portfolio, they can provide a steady income stream. Investors seeking income may consider increasing exposure to higher-yielding assets. However, it's essential to balance yield with growth potential, as high dividends may come from companies with slower growth prospects. A blend of growth and income assets could optimize returns.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • iShares Factors US Growth Style ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, with the VanEck Semiconductor ETF having the highest individual cost at 0.35%. While these costs are relatively low, minimizing expenses can enhance long-term returns. It's crucial to weigh the benefits of each ETF against its cost, as higher fees can erode returns over time. Consider reviewing the cost structures periodically and exploring lower-cost alternatives that align with your investment strategy and goals.

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