A growth-focused portfolio with significant tech exposure and moderate diversification

Report created on Apr 8, 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 towards equities, with 85% allocated to stock funds and individual stocks. The remaining 15% is held in a money market fund, providing a cash-like buffer. This composition aligns with a growth-oriented strategy, emphasizing capital appreciation over income. Compared to a typical balanced portfolio, this setup is more aggressive, with less exposure to bonds or other fixed-income assets. Consider adding different asset classes to increase diversification and potentially reduce volatility.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 9.07%, which is commendable for a growth-focused strategy. However, it has also experienced a significant maximum drawdown of -35.22%, indicating vulnerability during market downturns. This performance is reflective of its equity-heavy nature, which can lead to high returns but also increased risk. To mitigate potential losses, consider incorporating assets with lower volatility or hedging strategies.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential results. The 5th percentile shows a dramatic loss of -96.2%, while the 67th percentile indicates a gain of 70.1%. These projections highlight the inherent uncertainty and risk in the portfolio. While simulations provide valuable insights, they rely on past data and cannot predict future events. Regularly reassess your risk tolerance and adjust your portfolio accordingly.

Asset classes Info

  • Stocks
    85%
  • No data
    15%

The portfolio's asset allocation is predominantly in stocks, with a minor allocation to cash-like assets. This concentration in equities can lead to higher returns but also increases exposure to market volatility. Compared to a more diversified benchmark, the portfolio lacks exposure to fixed income or alternative investments, which could provide stability. Consider diversifying into additional asset classes to enhance risk-adjusted returns and reduce reliance on stock market performance.

Sectors Info

  • Technology
    31%
  • Financials
    21%
  • No data
    15%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Health Care
    5%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Real Estate
    1%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%

The portfolio is notably concentrated in the technology sector, comprising 31% of the allocation. This tech-heavy focus can drive substantial growth but also introduces sector-specific risks, particularly during periods of regulatory changes or interest rate hikes. Financial services and consumer cyclicals also have significant weightings. To mitigate sector risk, consider balancing exposure across other sectors, such as healthcare or utilities, which may offer more stability during economic fluctuations.

Regions Info

  • North America
    85%
  • No data
    15%

Geographically, the portfolio is heavily skewed towards North America, with 85% of assets allocated to this region. This concentration limits exposure to international markets, which can provide diversification benefits and reduce regional risk. Compared to global benchmarks, the portfolio lacks exposure to developed and emerging markets outside North America. Consider expanding geographic allocation to include Europe, Asia, and other regions to capture global growth opportunities and diversify risk.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    32%
  • No data
    15%
  • Mid-cap
    9%
  • Small-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 41% in mega-cap and 32% in big-cap companies. This focus on large, established companies provides stability and reliable growth but may limit exposure to the potentially higher returns of mid- and small-cap stocks. To enhance diversification and capture growth potential, consider increasing allocations to mid-cap and small-cap stocks, which can offer higher returns and complement the stability of larger companies.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund and the Vanguard Growth Index Fund. High correlation means these assets tend to move in the same direction, reducing diversification benefits. During market downturns, this can lead to compounded losses. To improve diversification, consider including assets with lower correlation, such as bonds or international equities, to balance the portfolio and mitigate risk.

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 may not be on the Efficient Frontier, which represents the best possible risk-return ratio. Optimizing the portfolio involves adjusting allocations among existing assets to achieve a more favorable balance between risk and return. Since the portfolio is heavily concentrated in highly correlated assets, consider reducing overlap and introducing less correlated investments. This can enhance diversification and potentially improve the risk-return profile, aligning the portfolio closer to the Efficient Frontier.

Dividends Info

  • Fidelity® Government Money Market Fund 4.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • Weighted yield (per year) 1.13%

The portfolio's dividend yield is relatively low at 1.13%, consistent with a growth-focused strategy prioritizing capital gains over income. The Fidelity Government Money Market Fund offers a higher yield of 4.20%, providing some income stability. While dividends are not the primary focus, they can contribute to total returns and provide a buffer during market volatility. Consider whether increasing dividend exposure aligns with your investment goals, particularly if income becomes a priority.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.03%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are particularly advantageous in a growth-oriented strategy, where maximizing capital appreciation is key. Continue to monitor and manage expenses, ensuring that any new investments or changes maintain or improve cost-effectiveness without compromising diversification or risk management.

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