Growth-Focused Portfolio with Moderate Diversification and High North American Exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio is suitable for a growth-oriented investor with a higher risk tolerance, seeking capital appreciation over income. Such investors typically have a long investment horizon, allowing them to weather market volatility and benefit from potential high returns. They are comfortable with the inherent risks of a stock-heavy portfolio and are willing to accept periods of significant drawdowns for the possibility of substantial gains. These investors are also open to exploring international markets for diversification but may prioritize familiar markets like North America.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    60.00%
  • Realty Income Corp
    O - US7561091049
    10.00%
  • Ford Motor Company
    F - US3453708600
    6.00%
  • Meta Platforms Inc.
    META - US30303M1027
    6.00%
  • Schwab U.S. Small-Cap ETF
    SCHA - US8085246077
    6.00%
  • Schwab International Equity ETF
    SCHF - US8085248057
    6.00%
  • SPDR® Portfolio S&P 500 High Dividend ETF
    SPYD - US78468R7888
    6.00%

The portfolio is primarily composed of ETFs and common stocks, with a significant allocation to the Vanguard S&P 500 ETF, making up 60% of the total. Other notable positions include Realty Income Corp, Ford Motor Company, and Meta Platforms Inc. The portfolio's asset allocation is heavily skewed towards stocks, leaving minimal exposure to other asset classes such as bonds or cash. This composition reflects a growth-oriented strategy, which can offer high potential returns but also comes with increased risk due to its heavy reliance on the stock market's performance.

Growth

Historically, the portfolio has demonstrated a strong performance with a compound annual growth rate (CAGR) of 12.91%. However, it has also experienced a significant maximum drawdown of -36.56%, indicating periods of substantial loss. The concentration of returns within just 28 days suggests that a few high-performing days have driven much of the portfolio's success. This performance pattern underscores the inherent volatility in a growth-focused portfolio, where timing and market conditions play crucial roles in overall returns.

Projection

Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio's future performance was projected. With 1,000 simulations, the results show a median (50th percentile) end portfolio value increase of 287.8%, while the 67th percentile projects a 507.87% increase. However, the 5th percentile indicates a potential loss of -31.98%. These projections highlight the portfolio's potential for significant growth but also underline the risk of substantial losses, emphasizing the importance of risk management and diversification.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Bonds
    0%
  • Other
    0%
  • No data
    0%

The portfolio is overwhelmingly concentrated in stocks, accounting for over 99% of the total asset allocation. This focus on equities aligns with a growth strategy but leaves the portfolio vulnerable to market downturns. The minimal presence of other asset classes such as bonds and cash suggests limited diversification, which can be detrimental during periods of market volatility. To enhance stability and reduce risk, incorporating a broader range of asset classes, such as bonds or alternative investments, could be beneficial.

Sectors

  • Technology
    21%
  • Consumer Discretionary
    14%
  • Real Estate
    13%
  • Telecommunications
    12%
  • Financials
    11%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Energy
    3%
  • Basic Materials
    2%

Sector-wise, the portfolio is diversified across several industries, with the largest allocations in technology, consumer cyclicals, and real estate. This sector distribution provides exposure to various economic segments, potentially balancing risk and return. However, the concentration in specific sectors like technology, which is known for volatility, can introduce additional risk. To mitigate sector-specific risks, consider adjusting allocations to achieve a more balanced sector representation, potentially enhancing the portfolio's resilience against sector downturns.

Regions

  • North America
    94%
  • Europe Developed
    4%
  • Japan
    1%
  • Asia Developed
    0%
  • Australasia
    0%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%
  • Asia Emerging
    0%

Geographically, the portfolio is heavily weighted towards North American assets, with 94.15% of the allocation. This concentration provides familiarity and potential stability but limits exposure to international markets, which can offer diversification benefits and growth opportunities. The minimal allocations in Europe, Asia, and other regions suggest a potential area for improvement. Diversifying geographically can reduce regional risk and tap into global growth trends, providing a more balanced investment approach.

Dividends

  • Ford Motor Company 5.70%
  • Meta Platforms Inc. 0.30%
  • Realty Income Corp 5.50%
  • Schwab U.S. Small-Cap ETF 2.10%
  • Schwab International Equity ETF 4.60%
  • SPDR® Portfolio S&P 500 High Dividend ETF 4.00%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 2.33%

The portfolio's dividend yield stands at 2.33%, with contributions from various positions like Ford Motor Company, Realty Income Corp, and the SPDR® Portfolio S&P 500 High Dividend ETF. This yield provides a steady income stream, which can be particularly valuable during periods of market volatility. However, the focus on growth stocks may limit the overall yield compared to a more income-oriented strategy. To enhance income, consider increasing allocations to high-dividend stocks or dividend-focused ETFs, balancing growth with income generation.

Ongoing product costs

  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • SPDR® Portfolio S&P 500 High Dividend ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio's cost structure is efficient, with low expense ratios across its ETF positions, contributing to a total expense ratio (TER) of 0.03%. This low-cost approach helps maximize net returns, as high fees can significantly erode investment gains over time. Maintaining a focus on cost-effective investment vehicles is crucial for optimizing long-term performance. To keep costs low, continue prioritizing low-cost ETFs and index funds, and regularly review the portfolio for any unnecessary expenses that could be minimized or eliminated.

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