A growth-focused portfolio with strong momentum in large-cap equities and limited diversification

Report created on Jan 5, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 87% in stocks and a significant concentration in large-cap growth and momentum ETFs. This composition leans towards a growth profile, aiming for capital appreciation. Compared to common benchmarks, this portfolio is more concentrated, with only a small allocation to bonds and minimal cash holdings. This focus on equities, particularly in growth sectors, indicates a higher risk tolerance. For improved diversification, consider adding more varied asset classes to balance potential volatility and enhance stability.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 18.38%, reflecting its growth-oriented strategy. However, the max drawdown of -28.26% highlights the potential for significant losses during market downturns. Compared to benchmarks like the S&P 500, this performance suggests higher volatility but also greater upside potential. It's important to remember that past performance doesn't guarantee future results. To mitigate risk, consider strategies to reduce drawdowns, such as increasing exposure to defensive assets or incorporating tactical asset allocation.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with an average annualized return of 16.61%. The simulations indicate a high probability of positive returns, with 980 out of 1,000 simulations yielding gains. However, it's crucial to note that these projections are based on historical data, which may not fully capture future market conditions. Consider stress-testing the portfolio under different scenarios to better understand potential risks and rewards. Diversifying the asset mix could help reduce uncertainty and improve resilience.

Asset classes Info

  • Stocks
    87%
  • Bonds
    13%

The portfolio's allocation is predominantly in stocks (87%), with a small portion in bonds (13%) and negligible cash holdings. This allocation reflects a strong growth orientation, emphasizing capital appreciation over income generation. Compared to typical balanced portfolios, this asset mix is less diversified, increasing exposure to equity market fluctuations. To enhance diversification, consider incorporating alternative asset classes such as real estate or commodities, which may provide additional stability and potential hedging benefits against market volatility.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Sector allocation shows a heavy emphasis on technology (29%) and financial services (14%), with smaller exposures to consumer cyclicals and communication services. This concentration in tech suggests potential for high growth but also increased susceptibility to sector-specific risks, such as regulatory changes or tech downturns. Compared to common benchmarks, the portfolio appears less diversified across sectors. Consider rebalancing to include more defensive sectors like utilities or healthcare, which can offer greater stability during economic downturns.

Regions Info

  • North America
    86%
  • Europe Developed
    1%

Geographically, the portfolio is heavily skewed towards North America (86%), with minimal exposure to other regions. This concentration limits the benefits of global diversification, which can help mitigate regional economic risks. Compared to global benchmarks, this geographic allocation is less diversified. Expanding exposure to developed and emerging markets could enhance diversification and provide access to growth opportunities outside North America. Consider evaluating regional trends and adjusting allocations to align with global economic shifts.

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 analysis suggests potential for improving the risk-return ratio through adjustments in asset allocation. The Efficient Frontier concept can help identify the optimal mix of assets for maximizing returns at a given risk level. This analysis is based solely on current assets, emphasizing the importance of strategic rebalancing. While efficiency focuses on the best risk-return ratio, it doesn't necessarily address diversification or other goals. Regularly reviewing the portfolio's alignment with the Efficient Frontier can help maintain optimal performance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Weighted yield (per year) 0.89%

The portfolio's dividend yield is relatively low at 0.89%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation through growth-oriented equities. For investors seeking income, consider increasing exposure to higher-yielding assets, such as dividend-focused stocks or bonds. Balancing growth and income can enhance the portfolio's total return potential and provide a more consistent cash flow, especially during periods of market volatility.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is low at 0.09%, which is beneficial for long-term performance. Lower costs mean more of your returns are retained, compounding over time. This efficiency is a positive aspect of the portfolio, aligning with best practices for cost management. However, it's essential to regularly review expenses, as even small differences in fees can impact long-term growth. Consider evaluating whether lower-cost alternatives are available, ensuring that cost efficiency remains a priority in your investment strategy.

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