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

Report created on Jan 30, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards technology stocks, with Microsoft and Apple making up a combined 38%. ETFs like Invesco NASDAQ 100 and Vanguard S&P 500 provide broad market exposure, but there's a notable concentration in U.S. equities. A growth-oriented profile is evident, with a focus on large-cap stocks. While the diversification score is moderate, the portfolio leans heavily on a few key holdings. Balancing these concentrations could enhance stability and reduce risk, especially during market volatility.

Growth Info

Historically, the portfolio has shown a solid CAGR of 11.68%, indicating strong growth over time. However, the max drawdown of -30.69% highlights potential vulnerability during market downturns. The concentrated days contributing to returns suggest reliance on a few high-performing days. Comparing these metrics to benchmarks can help assess the portfolio's resilience and growth capacity. Diversifying further and reducing concentration in tech could help mitigate risks and smooth out returns during turbulent periods.

Projection Info

Monte Carlo simulations, using historical data to project future outcomes, indicate a wide range of potential returns. With 1,000 simulations, only 196 had positive returns, suggesting a risk of underperformance. The median projection shows a significant loss, highlighting uncertainty in future gains. While these simulations provide a glimpse into potential outcomes, they rely on past data and cannot predict future results. Adjusting the portfolio to include less correlated assets might improve the probability of positive returns.

Asset classes Info

  • Stocks
    100%

The portfolio is 100% in stocks, which limits diversification benefits. While stocks offer growth potential, the absence of bonds or alternative assets can increase volatility. A more balanced allocation across different asset classes could provide a buffer against market fluctuations. Comparing this to benchmark allocations that typically include bonds or real estate can highlight areas for potential diversification. Introducing a small percentage of bonds or other assets might reduce risk and enhance long-term stability.

Sectors Info

  • Technology
    58%
  • Consumer Discretionary
    18%
  • Health Care
    7%
  • Telecommunications
    5%
  • Financials
    3%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

With 58% in technology, the portfolio is heavily skewed towards this sector. Consumer cyclicals and healthcare are the next largest allocations, at 18% and 7% respectively. Such concentration in tech may lead to higher volatility, especially during interest rate changes or tech sector downturns. While the tech sector offers growth, balancing with more stable sectors like consumer defensive or utilities could provide steadier returns. Aligning with sector benchmarks might help in achieving better sectoral balance.

Regions Info

  • North America
    91%
  • Europe Developed
    4%
  • Asia Emerging
    4%
  • Asia Developed
    1%

The portfolio's geographic exposure is predominantly in North America at 91%, with minimal allocation to Europe and Asia. This concentration could expose the portfolio to regional risks, such as economic or political changes in the U.S. Diversifying geographically by increasing exposure to emerging markets or other regions could reduce risk and capture growth opportunities globally. Comparing to global benchmarks can provide insights into potential benefits of increased international diversification.

Market capitalization Info

  • Mega-cap
    69%
  • Large-cap
    18%
  • Mid-cap
    6%
  • Small-cap
    4%
  • Micro-cap
    2%

With 69% in mega-cap stocks, the portfolio leans towards established, stable companies. This can provide reliability but may limit exposure to high-growth opportunities often found in smaller-cap stocks. Balancing market cap exposure by including more mid or small-cap stocks might enhance growth potential and diversification. Reviewing benchmark allocations for market cap can guide adjustments to achieve a more balanced risk-return profile.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio has highly correlated assets, such as the Vanguard S&P 500 ETF and Invesco NASDAQ 100 ETF. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, correlated assets may exacerbate losses. Reducing overlap by selecting less correlated investments might improve risk management. Exploring assets with lower correlation can enhance diversification and potentially stabilize 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's current allocation could be optimized using the Efficient Frontier, which seeks the best risk-return ratio. Removing highly correlated assets is a first step towards achieving this. The optimal portfolio suggests a higher expected return of 44.76%, though it comes with increased risk. Balancing risk and return is key to optimization. Adjusting the allocation among current assets might improve efficiency without significantly altering the portfolio's risk profile, aligning with growth objectives.

Dividends Info

  • Apple Inc 0.40%
  • BYD Co Ltd ADR 1.20%
  • iShares Self-Driving EV and Tech ETF 1.40%
  • iShares Russell 2000 ETF 1.10%
  • McDonald’s Corporation 2.30%
  • Microsoft Corporation 0.70%
  • AdvisorShares Psychedelics ETF 1.30%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 0.85%

The portfolio's dividend yield is 0.85%, with contributions from companies like McDonald's and ETFs like Vanguard Total International Stock Index Fund. While dividends can provide steady income, the portfolio's growth focus means dividends are not a primary driver. For investors seeking income, increasing allocation to higher-yielding stocks or funds could be beneficial. However, maintaining a balance between growth and income is crucial to meet long-term goals.

Ongoing product costs Info

  • iShares Self-Driving EV and Tech ETF 0.47%
  • iShares Russell 2000 ETF 0.19%
  • AdvisorShares Psychedelics ETF 0.99%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is 0.07%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs align well with best practices, ensuring more of the portfolio's returns are retained. Regularly reviewing and optimizing costs, especially in actively managed funds, can further enhance net returns. Maintaining this cost discipline is beneficial for achieving financial goals over time.

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