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

Report created on Dec 17, 2024

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 ETFs, with a substantial 46.87% in Schwab U.S. Large-Cap Growth ETF. This suggests a strong focus on growth-oriented large-cap stocks. Common stocks make up a smaller portion, with Comstock Mining Inc representing 8.28%. The remaining assets are spread across various ETFs, indicating a preference for diversified funds over individual stocks. This composition leans heavily towards equities, with minimal cash holdings, suggesting a high-risk strategy typical of growth portfolios. To balance risk, consider introducing more defensive assets or increasing cash holdings to cushion against market volatility.

Growth Info

Historically, the portfolio has shown impressive growth with a CAGR of 19.11%, but it also experienced a significant maximum drawdown of -37.42%. This indicates that while the portfolio has the potential for high returns, it is also susceptible to substantial losses during market downturns. Such performance metrics highlight the importance of risk management strategies, especially for investors with lower risk tolerance. Diversifying into less volatile asset classes or increasing cash reserves could help mitigate future drawdowns without significantly sacrificing potential returns.

Projection Info

The Monte Carlo simulation, using historical data, projects a wide range of potential outcomes, with a 5th percentile loss of -85.23% and a 67th percentile gain of 557.45%. This simulation helps understand the range of possible future performance by running thousands of potential market scenarios. However, it is based on past data and cannot predict future market conditions with certainty. Investors should use these projections as a guide rather than a guarantee, considering adjustments to improve potential outcomes, such as increasing diversification or rebalancing asset allocations.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, accounting for 99.82% of the total allocation, with a negligible 0.18% in cash. This heavy reliance on equities amplifies potential returns but also increases risk exposure, particularly in volatile markets. A more balanced allocation across different asset classes, such as bonds or real estate, could enhance diversification and provide a buffer during market downturns. This adjustment would align the portfolio more closely with a moderate risk profile, appealing to investors seeking growth with some level of protection.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    10%
  • Basic Materials
    10%
  • Health Care
    9%
  • Telecommunications
    9%
  • Financials
    8%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

Technology dominates the sectoral allocation, making up 40.82% of the portfolio. This concentration suggests a strong belief in the growth potential of tech stocks, but it also increases vulnerability to sector-specific downturns. Other sectors like consumer cyclicals, basic materials, and healthcare provide some diversification but are significantly underweighted. To reduce sector-specific risk, consider reallocating funds to underrepresented sectors, such as utilities or consumer defensives, which typically offer stability during economic downturns and can smooth out overall portfolio volatility.

Regions Info

  • North America
    99%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99.49% of assets, leaving minimal exposure to international markets. This lack of geographic diversification can lead to increased vulnerability to regional economic downturns or policy changes. Expanding exposure to developed and emerging markets in Europe, Asia, and Latin America could provide growth opportunities and reduce reliance on the North American market. By diversifying geographically, investors can benefit from different economic cycles and potentially enhance long-term returns.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    iShares Russell Top 200 ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes several highly correlated assets, such as the Vanguard Information Technology Index Fund ETF Shares and the Invesco NASDAQ 100 ETF. High correlation among assets means they tend to move in the same direction, which can amplify portfolio volatility during market swings. Reducing the number of overlapping assets could enhance diversification and improve risk management. Consider replacing some of these correlated ETFs with those that have a lower correlation to existing holdings, thereby achieving a more balanced and resilient 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's current allocation could be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. This involves rebalancing existing assets to achieve a more efficient allocation without necessarily adding new investments. By focusing on the Efficient Frontier, investors can potentially increase returns for the same level of risk or maintain returns while reducing risk. This method emphasizes the importance of asset allocation over individual security selection, helping investors make more informed decisions about their portfolio structure.

Dividends Info

  • iShares Russell Top 200 ETF 1.00%
  • Invesco NASDAQ 100 ETF 0.60%
  • Invesco S&P 500® Equal Weight ETF 1.50%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.78%

The portfolio's dividend yield stands at a modest 0.78%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 3.6%. While growth is the primary focus, dividends can provide a steady income stream and help offset market volatility. Investors might consider increasing exposure to higher-yielding assets to boost income without compromising growth potential. Balancing growth and income can enhance total returns, especially important for investors nearing retirement or seeking regular income from their investments.

Ongoing product costs Info

  • iShares Russell Top 200 ETF 0.15%
  • Invesco NASDAQ 100 ETF 0.15%
  • Invesco S&P 500® Equal Weight ETF 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is relatively low at 0.07%, which is advantageous for long-term growth as it minimizes the drag on returns. However, some individual ETFs like the Invesco S&P 500® Equal Weight ETF have higher fees at 0.2%. Reducing costs further by selecting lower-cost alternatives or increasing allocations to already low-cost funds could improve net returns over time. Cost management is a crucial aspect of portfolio optimization, ensuring that more of the investment's growth is retained by the investor.

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