A growth-focused portfolio with strong U.S. emphasis and moderate diversification

Report created on Apr 1, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted in ETFs, with a focus on well-known indices like the S&P 500 and Total World Stock. The largest holdings are the Vanguard Total World Stock Index Fund ETF and the Vanguard S&P 500 ETF, together making up nearly 43% of the portfolio. This composition leans towards a passive investment strategy, mirroring the broader market. While this provides stability and broad market exposure, it may limit opportunities for above-market returns. Consider diversifying further into different asset classes to reduce market correlation.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 14.53%, indicating impressive growth over time. However, it experienced a significant maximum drawdown of -33.33%, reflecting vulnerability during market downturns. This performance is in line with a growth-focused strategy, which typically involves higher volatility. By comparing to benchmarks, the portfolio's returns are commendable, but the drawdown highlights the need for risk management strategies. Diversifying across more asset classes could mitigate such risks in future downturns.

Projection Info

Forward projections using Monte Carlo simulations estimate an annualized return of 15.78%. With 1,000 simulations, the portfolio shows a high probability of positive returns, with 975 simulations yielding gains. However, it's crucial to note that Monte Carlo simulations rely on historical data, which may not predict future market conditions accurately. While these projections are optimistic, they should be balanced with caution, as market dynamics can change unexpectedly. Regularly reviewing asset allocation and diversifying can help manage potential risks.

Asset classes Info

  • Stocks
    100%

The portfolio is solely composed of stocks, which limits diversification. While this aligns with a growth-focused strategy, it increases exposure to equity market volatility. A more diversified portfolio might include bonds or alternative assets to cushion against stock market fluctuations. Comparing to benchmarks, a 100% stock allocation is aggressive, suggesting a higher risk tolerance. Consider introducing other asset classes to achieve a more balanced risk-return profile, especially if market conditions become less favorable for equities.

Sectors Info

  • Technology
    38%
  • Financials
    13%
  • Health Care
    10%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Energy
    4%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The portfolio is heavily weighted in technology, comprising 38% of the total allocation. This concentration can lead to higher volatility, especially during periods of tech sector downturns. Other sectors like financial services and healthcare provide some balance but are less prominent. Sector diversification is crucial to mitigate sector-specific risks. While tech-heavy portfolios can benefit from growth, diversifying into other sectors may provide stability and reduce overall portfolio risk, especially in changing economic environments.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Africa/Middle East
    1%

With 90% of the portfolio allocated to North America, there's limited geographic diversification. This concentration exposes the portfolio to U.S. market risks, which may not always align with global economic growth. Expanding exposure to emerging markets or other developed regions could enhance diversification and tap into growth opportunities outside the U.S. Comparing to global benchmarks, this portfolio is underexposed internationally. Consider gradually increasing international allocations to balance geographic risk.

Market capitalization Info

  • Large-cap
    37%
  • Mega-cap
    34%
  • Mid-cap
    20%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio is well-diversified across market capitalizations, with a significant focus on large and mega-cap stocks, making up 71% of the allocation. This provides stability and exposure to established companies. However, small and micro-cap stocks are underrepresented, which could limit growth potential. Balancing exposure across different market caps can enhance diversification and capture growth opportunities in smaller, potentially higher-growth companies. Consider increasing small-cap exposure for a more balanced approach.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    iShares Core Dividend Growth ETF
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated groups, such as dividend-focused ETFs and broad market indices. High correlation between assets can limit diversification benefits, especially during market downturns when correlated assets may decline together. While correlated assets can provide consistent returns, they may not offer sufficient protection during volatile periods. To enhance diversification, consider reducing exposure to highly correlated assets and introducing more unique investments that behave differently in various market conditions.

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 can be optimized by addressing its asset correlation and sector concentration. Using the Efficient Frontier concept, which balances risk and return, the portfolio could achieve a better risk-return ratio by adjusting allocations. This involves reallocating investments to achieve the highest possible return for a given level of risk. While the current assets are well-chosen, focusing on reducing overlaps and diversifying further can enhance efficiency. Regularly reviewing and rebalancing the portfolio can ensure it remains aligned with optimal risk-return objectives.

Dividends Info

  • iShares Core Dividend Growth ETF 2.20%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total World Stock Index Fund ETF Shares 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.65%

The portfolio's dividend yield is 1.65%, with contributions from various dividend-focused ETFs. While dividends provide a steady income stream, the overall yield is moderate. Dividend yields can be an essential component of total returns, especially in volatile markets. For investors seeking income, focusing on higher-yielding assets could enhance cash flow. However, it's crucial to balance dividend yields with growth potential to ensure the portfolio aligns with long-term objectives. Consider reviewing dividend allocations for optimal income and growth balance.

Ongoing product costs Info

  • Global X Cybersecurity ETF 0.50%
  • iShares Core Dividend Growth ETF 0.08%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low. Low costs are beneficial as they minimize the drag on returns, allowing more of the investment's performance to benefit the investor. This cost efficiency aligns well with a passive investment strategy, emphasizing broad market exposure. Continuously monitoring and managing costs is essential, as even small reductions in expenses can significantly impact long-term returns. Keeping costs low will support better performance over time, reinforcing the portfolio's growth focus.

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