A growth-focused portfolio with significant U.S. exposure and high sector diversification

Report created on Mar 17, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with 45% in the iShares Core S&P 500 ETF, and includes a mix of ETFs focused on developed and emerging markets. While the Vanguard FTSE Developed Markets ETF and Vanguard FTSE Emerging Markets ETF offer international exposure, the portfolio remains predominantly U.S.-centric. This composition aligns with a growth-oriented strategy, providing a robust foundation for capital appreciation. However, the lack of fixed income or alternative assets could increase volatility. Considering adding other asset classes may enhance diversification and reduce risk.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 14.97%, indicating robust growth over time. However, it also experienced a maximum drawdown of -33.63%, highlighting potential volatility during market downturns. Compared to benchmarks, this performance suggests a higher risk-return profile. While past performance is not indicative of future results, maintaining a balanced approach can help manage risks. Regularly reviewing allocations and market conditions is crucial to sustaining growth while mitigating potential losses.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 simulations. These simulations suggest a wide range of potential outcomes, with the 5th percentile at 74.6% and the 67th percentile at 849.7%. The median (50th percentile) projection is 575.4%, indicating a strong potential for growth. However, it's essential to remember that these projections are based on historical data and assumptions, which may not account for future market conditions. Continual monitoring and adjustments in response to market changes can help optimize outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to cash, bonds, or other asset classes. While this focus on equities aligns with a growth strategy, it may lead to increased volatility compared to more diversified portfolios. Typically, incorporating fixed income or alternative investments can help mitigate risks and provide a buffer during market downturns. Evaluating the potential benefits of diversifying into other asset classes could enhance the portfolio's risk-adjusted returns.

Sectors Info

  • Technology
    26%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with significant exposure to technology (26%), financial services (17%), and consumer cyclicals (11%). This aligns with common benchmarks, providing a balanced sectoral mix. However, the tech-heavy allocation could lead to higher volatility, especially during interest rate fluctuations. Regularly reviewing sector trends and adjusting allocations can help manage sector-specific risks and capitalize on emerging opportunities.

Regions Info

  • North America
    73%
  • Europe Developed
    12%
  • Japan
    5%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%

With 73% of the portfolio allocated to North America, there's a notable home bias. While this has been beneficial given recent U.S. market performance, it may limit diversification benefits. The portfolio includes some exposure to developed markets in Europe and Asia, but emerging markets remain underrepresented. Increasing exposure to these regions could enhance diversification and reduce potential risks associated with U.S. market dependence.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    18%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio is heavily weighted towards large-cap stocks, with 44% in mega-cap and 32% in big-cap companies. This provides stability and potential for steady growth. However, small and micro-cap stocks constitute only 6%, which might limit opportunities for outsized gains. Balancing market capitalization exposure by slightly increasing the allocation to smaller companies could enhance growth potential while maintaining stability.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Invesco S&P 500® Quality ETF
    iShares Core S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Schwab U.S. Large-Cap Growth ETF, Invesco S&P 500® Quality ETF, and iShares Core S&P 500 ETF. High correlation can limit diversification benefits, especially during market downturns when correlated assets tend to move together. Consider reviewing these holdings to identify opportunities for diversification, potentially by introducing less correlated assets to the portfolio.

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 positioned for potential optimization through the Efficient Frontier, which identifies the best possible risk-return ratio. Current allocations could be adjusted to optimize this ratio, potentially improving returns without significantly increasing risk. However, it's essential to consider that optimization is based solely on current assets and allocation changes, not broader diversification goals. Continually assessing and adjusting allocations can help achieve an optimal balance.

Dividends Info

  • iShares Core S&P 500 ETF 1.40%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® Quality ETF 0.90%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Vanguard Small-Cap Index Fund ETF Shares 1.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 2.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.60%

The portfolio's total dividend yield is 1.60%, with contributions from various ETFs. While not the primary focus of a growth portfolio, dividends can provide a steady income stream and enhance total returns. For investors seeking income, evaluating the balance between growth and yield could be beneficial. Adjusting allocations to include higher-yielding assets may offer more consistent income.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Quality ETF 0.15%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, reflecting efficient cost management. This low cost structure supports better long-term performance by minimizing the drag on returns. Maintaining a focus on cost-effective investments is crucial, as even small fee reductions can significantly impact compounding returns over time. Regularly reviewing and comparing fund expenses ensures ongoing cost efficiency.

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