A tech-heavy growth portfolio with moderate diversification and high North American exposure

Report created on Dec 6, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

This portfolio is heavily weighted towards equity ETFs, with a significant focus on the S&P 500 and technology sectors. With 50% in the Vanguard S&P 500 ETF and 30% in the Vanguard Information Technology Index Fund, it leans towards large-cap U.S. equities. Smaller allocations to U.S. small-cap value and international stocks add some diversification. Understanding the composition is crucial because it can affect volatility and potential returns. To balance this concentration, consider adding more diverse asset types, such as bonds or real estate, which may reduce risk and provide stability during market downturns.

Growth Info

Historically, this portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 19.33%. However, it has also experienced significant drawdowns, with a maximum of -34.31%. This highlights the potential for both high returns and high volatility. Past performance is not always indicative of future results, as market conditions can change. To mitigate potential losses, consider incorporating strategies such as dollar-cost averaging or setting stop-loss orders to protect gains and limit downside exposure.

Projection Info

Monte Carlo simulations, using historical data, suggest a wide range of potential outcomes for this portfolio. With a median projected return of 766.61% and an annualized return of 19.63%, the projections are optimistic, though not guaranteed. Simulations like these help investors understand the variability of returns and the potential for both gains and losses. It's important to remember that these projections are based on historical data and assumptions, which may not hold true in the future. Regularly reviewing and adjusting the portfolio in response to market changes can help align it with your goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with over 99% allocation, leaving minimal exposure to other asset classes like cash or bonds. This high equity concentration can lead to significant growth potential but also increases risk and volatility. Diversification across asset classes can help manage risk and provide more stable returns over time. Consider adding fixed income or alternative investments to create a more balanced portfolio that can withstand various market conditions.

Sectors Info

  • Technology
    48%
  • Financials
    12%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily skewed towards technology, comprising nearly 48% of the allocation. While this can drive growth during tech booms, it also exposes the portfolio to sector-specific risks. A well-diversified sector allocation can reduce the impact of downturns in any single sector. To achieve better balance, consider reallocating some funds to underrepresented sectors like healthcare or utilities, which may offer defensive qualities and stability during market turbulence.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly invested in North America, with nearly 90% exposure. This concentration can limit the benefits of global diversification and expose the portfolio to regional economic risks. International diversification can provide exposure to different economic cycles and growth opportunities. Consider increasing allocations to emerging markets or other developed regions to capture global growth potential and reduce reliance on the North American 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.

Optimization using the Efficient Frontier suggests that this portfolio can be adjusted for a better risk-return ratio. By reallocating existing assets, it's possible to achieve a more efficient portfolio without introducing new investments. This process involves finding the right balance of risk and return, maximizing gains for a given level of risk. Regular rebalancing and optimization can help maintain this balance, ensuring the portfolio remains aligned with your risk tolerance and investment objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.22%

The portfolio's dividend yield is relatively modest at 1.22%, with the highest yield from the Vanguard Total International Stock Index Fund at 2.9%. Dividends can provide a steady income stream and contribute to total returns, especially in low-growth environments. To enhance income, consider increasing exposure to dividend-focused investments or funds with higher yields. This strategy can provide a cushion during market downturns and contribute to long-term wealth accumulation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

With a total expense ratio (TER) of 0.08%, this portfolio is cost-effective, minimizing the drag on returns. Keeping costs low is crucial for maximizing long-term performance, as high fees can erode returns over time. Regularly review and compare the expense ratios of your investments to ensure they remain competitive. If possible, consider switching to lower-cost alternatives or negotiating fees to further reduce costs and enhance net returns.

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