A growth-focused portfolio with high exposure to technology and limited diversification

Report created on Dec 6, 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 concentrated, with 82.71% in the Vanguard Total Stock Market Index Fund ETF and 17.29% in Apple Inc. This structure indicates a strong reliance on the performance of U.S. equities, especially within the technology sector. While the ETF offers broad market exposure, the significant allocation to Apple introduces a single-stock risk. This concentration can lead to higher volatility. Diversifying into other asset classes like bonds or international equities could provide a more balanced risk-return profile, enhancing stability.

Growth Info

Historically, this portfolio has shown strong performance, with a compound annual growth rate (CAGR) of 16.09%. However, it has also experienced a maximum drawdown of -33.85%, indicating substantial volatility. The historical performance provides an insight into potential returns but does not guarantee future outcomes. Past performance can be influenced by market conditions that may not repeat. To mitigate risk, consider adding assets with lower correlation to the current holdings, potentially smoothing out future downturns.

Projection Info

The Monte Carlo simulation, using 1,000 iterations, projects a wide range of potential outcomes based on historical data. The median scenario suggests a 1,196.23% return, while the 5th percentile indicates a 163.85% return. Although simulations provide a probabilistic view, they rely on historical trends that may not persist. Market conditions, economic shifts, and unforeseen events can impact future performance. Regularly reviewing and adjusting the portfolio in response to changing market dynamics can help align it with your investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly allocated to stocks, with 99.82% in equities and a minimal 0.18% in cash. This heavy equity allocation aligns with a growth-oriented strategy but lacks the diversification benefits that other asset classes like bonds or real estate might offer. Diversifying across multiple asset classes can help mitigate risk and provide more stable returns over time. Consider exploring alternative investments that may offer a hedge against equity market volatility, such as commodities or fixed income.

Sectors Info

  • Technology
    43%
  • Financials
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Sector exposure is concentrated, with technology making up 42.74% of the portfolio. Other sectors like financial services, healthcare, and consumer cyclicals have smaller allocations. This concentration in technology can lead to increased volatility, especially given the sector's sensitivity to economic cycles and innovation risks. To reduce sector-specific risk, consider rebalancing the portfolio to include a broader mix of industries. This approach can enhance resilience against sector downturns and contribute to a more stable performance.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is overwhelmingly North American, at 99.60%, with minimal allocations elsewhere. This lack of international diversification could expose the portfolio to regional economic risks. By incorporating more global equities, you can benefit from growth opportunities in other regions and reduce reliance on the North American market. A well-diversified geographic allocation can help manage currency and geopolitical risks, providing a buffer against localized economic 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.

An Efficient Frontier analysis could optimize this portfolio by adjusting the allocation between the current assets to achieve a better risk-return balance. Although the portfolio is growth-focused, its high concentration in technology and U.S. equities may not be the most efficient configuration. By reallocating some of the weight from Apple to the Vanguard ETF or other diversified assets, you could potentially improve the portfolio's efficiency. This process seeks the highest expected return for a given level of risk.

Dividends Info

  • Apple Inc 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.06%

The portfolio has a modest dividend yield of 1.06%, with Apple contributing 0.4% and the Vanguard ETF 1.2%. Dividends can provide a steady income stream and enhance total returns, especially during market downturns. However, the current yield is relatively low, reflecting the growth-focused nature of the portfolio. If income generation is a priority, consider reallocating some assets to higher-yielding investments, such as dividend-focused ETFs or stocks with a history of consistent payouts.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are low, with the Vanguard ETF's expense ratio at 0.03% and a total TER of 0.02%. Keeping costs low is crucial for maximizing long-term returns, as fees can significantly erode profits over time. The current cost structure is efficient, allowing more of your investment to compound. Continually monitoring and minimizing expenses can further enhance performance. Consider comparing expense ratios of similar funds to ensure competitive pricing and explore commission-free trading options.

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