A growth-focused portfolio with strong tech exposure and a high North American concentration

Report created on Jan 24, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of funds and ETFs, with a notable allocation to individual stocks like Amazon and Meta. This mix results in a well-diversified portfolio with 97% in stocks and 3% in bonds. Compared to a typical benchmark, the portfolio leans heavily on equities, suggesting a growth-oriented strategy. This composition aligns with a higher risk tolerance, aiming for substantial capital appreciation. To further balance risk, consider increasing bond exposure to buffer against market volatility, which could enhance the portfolio's resilience during downturns.

Growth Info

Historically, the portfolio has delivered impressive returns, with a CAGR of 16.37%. This performance surpasses many benchmarks, indicating a strong growth trajectory. However, the maximum drawdown of -40.38% highlights significant volatility, reflecting the inherent risks of a growth-focused strategy. While past performance provides useful insights, it's crucial to remember that it doesn't guarantee future results. To mitigate potential drawdowns, consider diversifying further or incorporating defensive assets, which could help stabilize returns during market corrections.

Projection Info

The forward projection using Monte Carlo simulation suggests robust potential outcomes, with a median return scenario of 781% over the investment horizon. This method uses historical data to simulate a range of future outcomes, providing a probabilistic view rather than a prediction. While the results are optimistic, it's important to note that simulations rely on historical trends and assumptions, which may not fully capture future market dynamics. Regularly reviewing and adjusting the portfolio can help align with evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    97%
  • Bonds
    3%
  • Cash
    1%

The portfolio's asset class allocation is heavily skewed towards stocks, with a minimal bond allocation. This focus on equities is typical for growth-oriented portfolios seeking capital appreciation. However, such a concentration can increase risk during market downturns. Compared to a balanced benchmark, the low bond exposure suggests a higher risk tolerance. To enhance diversification and potentially reduce volatility, consider increasing the allocation to bonds or other asset classes, which could provide more stability and income.

Sectors Info

  • Technology
    26%
  • Telecommunications
    17%
  • Consumer Discretionary
    14%
  • Health Care
    12%
  • Financials
    9%
  • Industrials
    6%
  • Consumer Discretionary
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio shows a strong concentration in technology and communication services, comprising 43% of the total allocation. This sectoral bias can lead to higher volatility, especially during periods of tech sector fluctuation. Compared to a diversified benchmark, this allocation indicates a strategic focus on high-growth areas. While this can drive returns, it also necessitates a careful monitoring of sector trends. To mitigate sector-specific risks, consider diversifying into sectors like healthcare or consumer staples, which may offer more stability.

Regions Info

  • North America
    87%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio is predominantly focused on North America, with 87% of its assets allocated there. This geographic concentration can expose the portfolio to region-specific risks, such as economic downturns or policy changes in the U.S. Compared to a global benchmark, the portfolio underweights regions like Europe and emerging markets. To enhance geographic diversification and reduce potential risks, consider increasing exposure to international markets. This can provide access to growth opportunities outside North America and help balance regional volatility.

Market capitalization Info

  • Mega-cap
    60%
  • Large-cap
    23%
  • Mid-cap
    12%
  • Small-cap
    2%

The portfolio is heavily weighted towards mega-cap stocks, comprising 60% of the allocation. This focus on large companies can provide stability and established market presence, but may limit exposure to the potentially higher growth of smaller companies. Compared to a diversified benchmark, the portfolio underweights small and medium-cap stocks. To capture growth opportunities and enhance diversification, consider increasing exposure to mid and small-cap stocks, which can offer unique growth potential and reduce reliance on large-cap performance.

Redundant positions Info

  • Vanguard Growth Index Fund ETF Shares
    Invesco QQQ Trust
    High correlation
  • Vanguard Total World Stock Index Fund ETF Shares
    VANGUARD 500 INDEX FUND ADMIRAL SHARES
    VANGUARD TARGET RETIREMENT 2055 FUND INVESTOR SHARES
    High correlation

The portfolio contains highly correlated assets, such as Vanguard Growth Index Fund ETF Shares and Invesco QQQ Trust. High correlation means these assets tend to move in tandem, which can limit diversification benefits. During market downturns, this can amplify losses if correlated assets decline simultaneously. To improve diversification, consider replacing or reducing exposure to overlapping assets, thereby introducing uncorrelated investments that can enhance the portfolio's resilience and risk-adjusted returns.

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 has potential for optimization using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This method doesn't guarantee diversification, but it aims to maximize returns for a given level of risk. By adjusting allocations among existing assets, you can potentially achieve a more efficient portfolio. Consider using optimization tools to explore different scenarios and identify opportunities to enhance the portfolio's performance without increasing risk.

Dividends Info

  • Johnson & Johnson 3.30%
  • Meta Platforms Inc. 0.30%
  • Invesco QQQ Trust 0.50%
  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • Weighted yield (per year) 0.62%

The portfolio's dividend yield is relatively low at 0.62%, reflecting its growth orientation. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. Compared to income-focused portfolios, the lower yield suggests a focus on reinvesting earnings for growth. If income is a priority, consider adding higher-yielding stocks or funds to the mix. This can provide a balance between growth and income, ensuring some level of cash flow while pursuing capital gains.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VANGUARD TARGET RETIREMENT 2055 FUND INVESTOR SHARES 0.08%
  • VANGUARD 500 INDEX FUND ADMIRAL SHARES 0.04%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained, enhancing compounding over time. Compared to industry averages, this TER is very competitive, indicating efficient cost management. Maintaining low costs is crucial for optimizing returns, so continue to monitor and minimize fees where possible. This can be achieved by regularly reviewing fund expenses and considering cost-effective alternatives if necessary.

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