A growth-focused portfolio with strong tech exposure and moderate geographic diversification

Report created on Feb 13, 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 primarily composed of equities, with ETFs making up a significant portion. The top holdings include the JPMorgan Nasdaq Equity Premium Income ETF and major tech stocks like Amazon and Meta. This composition leans towards growth, with a focus on large-cap technology companies. Compared to a typical benchmark, this portfolio is moderately diversified but tech-heavy, which can lead to higher volatility. Balancing growth with stability is crucial, and considering more diverse asset types could enhance resilience against market fluctuations.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 19.46%. This indicates robust growth, outpacing many benchmarks. However, the maximum drawdown of -17.90% highlights potential vulnerability during downturns. It's important to note that past performance doesn't guarantee future results. To mitigate such risks, diversifying further could help stabilize returns. Consider adding assets that historically perform well during market downturns to cushion against future volatility.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The median projection shows a substantial increase, but there's also a risk of a significant loss. While 892 out of 1,000 simulations resulted in positive returns, the 5th percentile indicated a possible -36.1% outcome. This highlights the inherent uncertainty in projections. Regularly reviewing and adjusting the portfolio based on changing market conditions can help navigate these uncertainties effectively.

Asset classes Info

  • Stocks
    93%
  • Real Estate
    4%
  • No data
    2%

The portfolio is heavily weighted towards stocks at 93%, with minimal exposure to real estate and no other asset classes. This concentration in equities aligns with a growth strategy but may lack the diversification benefits of including bonds or alternative investments. Compared to typical benchmarks, this allocation is quite aggressive. Introducing more varied asset classes could reduce risk and improve stability. Consider incorporating fixed income or other non-correlated assets to balance potential downturns in the stock market.

Sectors Info

  • Technology
    22%
  • Consumer Discretionary
    19%
  • Telecommunications
    15%
  • Financials
    11%
  • Health Care
    10%
  • Energy
    6%
  • Industrials
    6%
  • Real Estate
    5%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Utilities
    1%

Technology dominates the sector allocation at 22%, followed by consumer cyclicals and communication services. This concentration in tech reflects a growth-oriented approach but exposes the portfolio to sector-specific risks, especially during tech market corrections. In comparison to benchmarks, this allocation is less balanced. Diversifying into sectors like consumer defensives or utilities could mitigate volatility. Monitoring sector trends and adjusting allocations accordingly can help maintain a balanced risk-return profile.

Regions Info

  • North America
    96%
  • Europe Developed
    3%

With 96% of assets in North America, the portfolio is geographically concentrated, limiting exposure to international growth opportunities. This regional focus aligns with many U.S.-based benchmarks but may miss out on diversification benefits from global markets. Expanding geographic exposure, especially in emerging markets, could enhance growth potential and reduce reliance on North American market performance. Consider international ETFs or stocks to diversify geographic risk and capture global growth trends.

Market capitalization Info

  • Mega-cap
    49%
  • Mid-cap
    19%
  • Large-cap
    17%
  • Small-cap
    10%
  • Micro-cap
    3%

The portfolio has a strong emphasis on mega-cap stocks, comprising 49% of the allocation, which provides stability but may limit growth potential compared to smaller companies. Medium and small-cap stocks make up 29%, offering some diversification. This market cap distribution is somewhat aligned with benchmarks but could be adjusted for more growth opportunities. Increasing exposure to small and mid-cap stocks could enhance returns while adding diversification benefits.

Redundant positions Info

  • Technology Select Sector SPDR® Fund
    JPMorgan Nasdaq Equity Premium Income ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio includes highly correlated assets, particularly among tech-focused ETFs, which can limit diversification benefits. Correlation measures how assets move in relation to each other, and high correlation can increase risk during market downturns. Reducing overlap by selecting less correlated assets can enhance diversification and potentially improve risk-adjusted returns. Consider reallocating funds from highly correlated assets to those with lower correlation to achieve a more balanced 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 Efficient Frontier analysis suggests potential for optimization by reducing overlap and reallocating within current assets. Although the current portfolio has a solid risk-return profile, there's room for improvement. The optimal portfolio is projected to have a higher expected return with a similar risk level. Regularly reviewing asset allocation and considering rebalancing can help achieve a more efficient portfolio. Focus on maintaining the best possible risk-return ratio while aligning with personal investment goals.

Dividends Info

  • Capital Group Dividend Value ETF 1.50%
  • Pacer US Cash Cows 100 ETF 1.40%
  • Fidelity® MSCI Energy Index ETF 3.00%
  • Gladstone Capital Corporation 8.40%
  • Alphabet Inc Class C 0.30%
  • iShares MSCI Intl Quality Factor ETF 2.70%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.60%
  • JPMorgan Chase & Co 1.70%
  • Eli Lilly and Company 0.60%
  • Meta Platforms Inc. 0.30%
  • Microsoft Corporation 0.80%
  • First Trust Rising Dividend Achievers ETF 1.60%
  • iShares Residential and Multisector Real Estate ETF 2.20%
  • Invesco S&P SmallCap 600 Revenue ETF 0.90%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Mid-Cap Index Fund ETF Shares 1.80%
  • Technology Select Sector SPDR® Fund 0.50%
  • Invesco S&P MidCap Quality ETF 5.00%
  • Weighted yield (per year) 2.53%

The portfolio's dividend yield is 2.53%, which contributes to total returns but isn't the primary focus given the growth orientation. High-yield assets like the JPMorgan Nasdaq Equity Premium Income ETF and Gladstone Capital Corporation provide income stability. For investors seeking income, this yield is moderate. Balancing growth and income is key, and increasing allocation to higher-yielding assets could enhance income without sacrificing growth. Regularly reviewing dividend policies of holdings ensures alignment with income goals.

Ongoing product costs Info

  • Capital Group Dividend Value ETF 0.33%
  • Pacer US Cash Cows 100 ETF 0.49%
  • Fidelity® MSCI Energy Index ETF 0.08%
  • iShares MSCI Intl Quality Factor ETF 0.30%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • First Trust Rising Dividend Achievers ETF 0.49%
  • iShares Residential and Multisector Real Estate ETF 0.48%
  • Invesco S&P SmallCap 600 Revenue ETF 0.39%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Mid-Cap Index Fund ETF Shares 0.04%
  • Technology Select Sector SPDR® Fund 0.09%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.17%

The total expense ratio (TER) of the portfolio is 0.17%, which is impressively low and supports better long-term performance by minimizing cost drag. Most ETFs in the portfolio have competitive expense ratios, with Schwab and Vanguard offerings being particularly cost-effective. Keeping costs low is crucial for maximizing net returns. Continuously monitoring and comparing the expense ratios of current holdings with alternatives can ensure cost efficiency. Consider replacing higher-cost ETFs with similar lower-cost options to further enhance returns.

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