A growth-focused portfolio with high tech exposure and limited geographic diversity

Report created on Dec 29, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards large-cap growth stocks, with a 50% allocation to the Schwab U.S. Large-Cap Growth ETF. This dominance in growth-oriented assets suggests a focus on capital appreciation rather than income generation. Compared to a typical balanced portfolio, this composition may expose the investor to higher volatility, particularly during market downturns. To enhance diversification, consider incorporating assets like bonds or international equities, which can help stabilize returns during volatile periods and provide a more balanced risk-reward profile.

Growth Info

The portfolio has demonstrated strong historical performance, with a Compound Annual Growth Rate (CAGR) of 21.98%. This impressive growth indicates effective capital appreciation over time. However, the maximum drawdown of -34.15% highlights the potential volatility and risk inherent in the portfolio. While past performance is encouraging, it does not guarantee future results. To mitigate the risk of significant losses, consider diversifying across different asset classes, which can help cushion the impact of market downturns.

Projection Info

The forward projection using Monte Carlo simulation provides a range of potential outcomes based on historical data. With an annualized return of 25.16% and 989 out of 1,000 simulations showing positive returns, the outlook appears optimistic. However, simulations are based on past data and cannot predict future market conditions. It's crucial to consider potential economic changes or unexpected events that could impact returns. Regularly review and adjust the portfolio to stay aligned with evolving market trends and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with 99.87% allocation, leaving it highly exposed to equity market fluctuations. This lack of asset class diversity can increase risk, as stocks tend to be more volatile than other asset classes like bonds. Incorporating fixed income or alternative investments could offer a buffer against market volatility and provide more stable returns. A more balanced asset class allocation can help achieve a smoother investment journey and potentially improve the risk-adjusted return.

Sectors Info

  • Technology
    42%
  • Consumer Discretionary
    13%
  • Financials
    12%
  • Telecommunications
    9%
  • Industrials
    8%
  • Health Care
    8%
  • Consumer Staples
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    1%
  • Utilities
    1%

Technology dominates the sector allocation with 41.84%, significantly higher than typical benchmark weights. While this concentration can drive returns in bull markets, it also raises portfolio risk during tech sector downturns. The presence of other sectors like consumer cyclicals and financial services provides some balance, but the overall sector diversity is limited. To reduce sector-specific risks, consider increasing exposure to underrepresented sectors, which can enhance diversification and potentially stabilize returns.

Regions Info

  • North America
    97%
  • Asien
    1%
  • Europe Developed
    1%

The portfolio is heavily concentrated in North America, with 97.46% exposure. This geographic focus limits diversification benefits and increases vulnerability to regional economic downturns. A more globally diversified portfolio can reduce risk by spreading investments across different economic regions, which may not be correlated. Consider increasing allocations to developed and emerging markets outside North America to capture growth opportunities and mitigate regional risks.

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 concept, which aims to achieve the best possible risk-return ratio. This involves adjusting the weights of existing assets to maximize returns for a given level of risk. While the portfolio is growth-focused, it may benefit from slight reallocations to improve efficiency. Regularly reviewing the allocation and making necessary adjustments can help maintain optimal performance and align with changing market conditions and personal investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 0.90%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 0.56%

The portfolio's dividend yield is relatively low at 0.56%, reflecting its growth-oriented focus. While dividends are not a primary goal for growth investors, they can provide a steady income stream and help cushion against market volatility. If income generation is a secondary objective, consider incorporating higher-yielding assets. This could include dividend-focused ETFs or stocks, which can offer a balance between growth and income, enhancing the portfolio's overall return profile.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.12%

The total expense ratio (TER) of 0.12% is impressively low, indicating cost efficiency. Low costs can significantly enhance long-term returns by minimizing the drag on performance. This aligns well with best investment practices, as keeping expenses low is crucial for maximizing net returns. While the current cost structure is favorable, regularly reviewing and comparing fees with other investment options can ensure continued cost-effectiveness and optimize portfolio performance over time.

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