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

Report created on Mar 29, 2025

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 U.S. equities, with 57% in the Vanguard 500 Index Fund and 25% in the Vanguard Total Stock Market Index Fund. This composition suggests a strong tilt towards well-established companies, reflecting a preference for stability and potential growth. A benchmark comparison indicates a higher concentration in U.S. equities, which may limit exposure to global growth opportunities. To enhance diversification, consider adding international or alternative asset classes that align with your growth objectives.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 14.06%, surpassing many growth benchmarks. This performance is a testament to the strength of U.S. equities, particularly in the tech sector. However, the max drawdown of -32.81% highlights potential volatility during market downturns. To mitigate such risks, consider incorporating assets with lower volatility or diversifying across different sectors and geographies. This strategy could help stabilize returns while maintaining growth potential.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest an annualized return of 15.90%. The simulations indicate a wide range of potential outcomes, with the 5th percentile at 73.9% and the 67th at 834.3%. While these projections offer insights, it's crucial to remember that past performance doesn't guarantee future results. To improve future projections, consider diversifying the portfolio further to manage risk and potentially enhance returns.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, focusing on equity growth. This lack of asset class diversification may expose the portfolio to higher volatility, especially during market downturns. Diversification across asset classes, such as bonds or real estate, could provide a buffer against market fluctuations. By balancing growth with stability, the portfolio could achieve a more favorable risk-return profile, aligning with long-term growth goals.

Sectors Info

  • Technology
    35%
  • Financials
    12%
  • Telecommunications
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Consumer Discretionary
    2%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is tech-heavy, with 35% allocated to the technology sector, followed by financial services at 12%. This concentration may lead to higher volatility, especially if tech stocks face headwinds. While tech has been a strong performer, sector diversification could reduce risk and enhance stability. Consider spreading investments across sectors like healthcare or consumer staples, which may offer more consistent returns during economic downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of the portfolio invested in North America, geographic exposure is limited. This concentration could miss out on growth opportunities in emerging markets or developed regions outside the U.S. Diversifying geographically can reduce region-specific risks and tap into global economic growth. Consider allocating a portion of the portfolio to international equities to enhance diversification and capture potential growth from different markets.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    33%
  • Mid-cap
    17%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio primarily focuses on mega and large-cap stocks, accounting for 79% of the allocation. This emphasis on large companies offers stability but may limit exposure to the growth potential of smaller firms. Including mid-cap or small-cap stocks could enhance diversification and provide access to companies with higher growth prospects. Balancing market capitalization exposure can optimize the portfolio's risk-return profile.

Redundant positions Info

  • VANGUARD 500 INDEX FUND ADMIRAL SHARES
    VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES
    High correlation

The portfolio's assets are highly correlated, particularly the Vanguard funds, which move in tandem. This correlation may limit diversification benefits, as similar assets tend to perform alike during market shifts. To enhance diversification, consider reducing overlapping holdings and introducing assets with lower correlations. This adjustment could improve the portfolio's resilience to market volatility and provide a smoother investment journey.

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 could benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio. This involves adjusting the current asset allocation to achieve maximum returns for a given level of risk. However, optimization should consider diversification goals and risk tolerance. By focusing on the Efficient Frontier, the portfolio could enhance its performance while maintaining a growth-oriented strategy.

Dividends Info

  • Invesco QQQ Trust 0.50%
  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 1.00%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 1.00%
  • Weighted yield (per year) 0.91%

The portfolio's dividend yield is modest at 0.91%, reflecting its growth focus. While dividends contribute to total returns, the emphasis here is on capital appreciation. For investors seeking income, increasing exposure to higher-yielding assets could enhance cash flow. However, if growth is the primary goal, maintaining the current focus on equities could align with long-term objectives, given the portfolio's growth orientation.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 0.04%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.05%. This cost efficiency supports better long-term performance by minimizing expenses that can erode returns. Maintaining low costs is beneficial, but ensure that any changes to the portfolio, such as adding new funds, do not significantly increase the overall expense ratio. Keeping costs in check will continue to enhance the portfolio's growth potential.

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