A heavily concentrated portfolio with a focus on value investing and minimal geographic diversity

Report created on Jan 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated with 88.66% in the Vanguard Value Index Fund ETF and 11.34% in the Invesco NASDAQ 100 ETF. This limited diversification means the portfolio relies heavily on the performance of these two funds. Compared to a typical balanced portfolio, which might include a mix of stocks, bonds, and other asset classes, this portfolio is more focused and potentially more volatile. Consider diversifying into different asset classes or funds to spread risk and reduce dependency on these two ETFs.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.36%, outperforming many benchmarks. However, it also experienced a maximum drawdown of -17.84%, indicating significant volatility. While past performance is impressive, it's crucial to remember that past success does not guarantee future results. Balancing this historical performance with potential risk is key to maintaining long-term growth.

Projection Info

Monte Carlo simulations project a 16.44% annualized return, with a high probability of positive returns. Monte Carlo simulation uses historical data to predict future outcomes, but it is important to remember these are not guarantees. The wide range of potential outcomes indicates uncertainty, emphasizing the need for a well-diversified portfolio to manage risk effectively.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks (99.86%), with a tiny fraction in cash. This heavy stock allocation can lead to higher returns but also increases risk, especially during market downturns. A more diversified asset class allocation, including bonds or other fixed-income investments, could provide stability and reduce risk without sacrificing too much return potential.

Sectors Info

  • Financials
    20%
  • Health Care
    16%
  • Technology
    16%
  • Industrials
    12%
  • Consumer Staples
    10%
  • Consumer Discretionary
    6%
  • Energy
    6%
  • Telecommunications
    5%
  • Utilities
    5%
  • Real Estate
    3%
  • Basic Materials
    2%

The sector allocation is reasonably balanced, with financial services, healthcare, and technology being the top three. However, the heavy concentration in these sectors can lead to increased volatility, particularly if any of these sectors face downturns. Diversifying into underrepresented sectors could help mitigate this risk and provide more balanced growth opportunities.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic exposure is overwhelmingly focused on North America (99.00%), with minimal exposure to other regions. This lack of geographic diversity can make the portfolio vulnerable to region-specific risks. Consider increasing exposure to international markets to benefit from global growth opportunities and reduce regional risk concentration.

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 helps find the best possible risk-return ratio. This process involves adjusting the allocation between the current assets to achieve a more efficient portfolio. While the current allocation may be cost-effective, exploring optimization can further enhance performance by balancing risk and return more effectively.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Value Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 1.58%

The portfolio's total dividend yield is 1.58%, with the Vanguard Value Index Fund contributing a higher yield of 1.7%. Dividends can provide a steady income stream and are particularly beneficial for investors seeking income. However, relying too heavily on dividend yields may limit growth potential, so it's important to balance income with capital appreciation.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Value Index Fund ETF 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%. Low costs are beneficial for long-term performance, as they reduce the drag on returns. This efficient cost structure aligns well with best practices in portfolio management, ensuring more of the investment returns are retained by the investor.

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