A growth-focused portfolio with high tech exposure and low geographic diversification

Report created on Jan 11, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with a significant concentration in the Vanguard S&P 500 ETF, making up over 60% of the total allocation. The remaining investments are in the Fidelity MSCI Information Technology Index ETF and the Schwab U.S. Dividend Equity ETF. Compared to common benchmarks, this composition is heavily concentrated in U.S. large-cap equities. While this can drive growth, it may lack the diversification needed to mitigate risks. Consider diversifying into different asset classes, such as bonds or international equities, to balance risk and return.

Growth Info

The historical performance of this portfolio is strong, with a compound annual growth rate (CAGR) of 15.67%. This growth rate is impressive compared to typical market benchmarks, reflecting the portfolio's focus on high-growth sectors. However, it also experienced a maximum drawdown of -33.14%, indicating significant volatility. Such volatility can be unsettling during market downturns. While past performance can offer insights, it does not guarantee future returns. Regularly reviewing performance relative to risk tolerance can help maintain alignment with investment goals.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns. The median outcome shows a substantial increase, while the lower percentile indicates the potential for modest gains. The high number of positive simulations is encouraging, yet it's crucial to remember that these projections are not guarantees. They provide a probability-based outlook, which can be useful for planning but should be complemented with ongoing portfolio reviews and adjustments based on changing financial goals or market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a minimal allocation to cash. This focus on equities aligns with a growth-oriented strategy but limits exposure to other asset classes like bonds or real estate, which can offer stability during market volatility. Compared to diversified benchmarks, this lack of asset class variety increases potential risk. To enhance diversification, consider incorporating alternative assets that can provide a hedge against equity market downturns, such as fixed income or real estate investments.

Sectors Info

  • Technology
    47%
  • Financials
    11%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    6%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Utilities
    2%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio's sector allocation is heavily skewed towards technology, which represents nearly half of the total investment. This concentration can lead to higher volatility, especially if the tech sector faces downturns. While the tech sector has driven significant growth, a balanced sector allocation could reduce risk. Consider diversifying into sectors like healthcare or consumer staples, which can offer more stability and are less sensitive to economic cycles. This can help achieve a more balanced risk-return profile.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with minimal exposure to other regions. This limits the benefits of geographic diversification, which can reduce risk by spreading investments across different economic environments. Compared to global benchmarks, this portfolio's lack of international exposure could miss out on growth opportunities in emerging markets. Consider increasing allocations to international equities to capture global growth potential and reduce reliance on the U.S. market.

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 is well-positioned on the Efficient Frontier, indicating a strong risk-return balance given its current asset allocation. However, this optimization is based solely on the existing assets and their respective allocations. To further enhance efficiency, consider adjustments that could improve the portfolio's risk-return ratio, such as diversifying into less correlated asset classes or sectors. This strategic tweaking can help achieve an optimal balance that aligns with your risk tolerance and investment goals.

Dividends Info

  • Fidelity® MSCI Information Technology Index ETF 0.40%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.41%

The portfolio's overall dividend yield is modest, at 1.41%, with the Schwab U.S. Dividend Equity ETF contributing the most. While dividends can provide a steady income stream, this portfolio leans more towards growth rather than income generation. For investors seeking higher income, consider increasing allocations to high-dividend-paying stocks or funds. However, ensure that any changes align with overall investment goals and risk tolerance, as higher yields can sometimes come with increased risk.

Ongoing product costs Info

  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.05%. This is a positive aspect, as lower costs contribute to better long-term performance by preserving more of the investment returns. Maintaining a focus on low-cost funds is a sound strategy, as it enhances the portfolio's efficiency. Regularly reviewing expense ratios and considering lower-cost alternatives can further optimize performance without compromising on quality or diversification.

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