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

Report created on Feb 9, 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 the Vanguard S&P 500 ETF, which makes up 42.21% of the total allocation. This ETF provides broad exposure to the U.S. stock market, serving as a solid foundation for growth. The portfolio also includes significant individual stock holdings in Alphabet Inc. and NVIDIA Corporation, representing 22.37% and 21.95%, respectively. This composition leans heavily on large-cap tech stocks, which can drive growth but may also introduce volatility. Balancing these with more diverse asset types could enhance stability.

Growth Info

Historically, the portfolio has shown impressive growth with a Compound Annual Growth Rate (CAGR) of 29.07%. This is indicative of its strong performance, especially during bullish market periods. However, the portfolio also experienced a maximum drawdown of -60.01%, highlighting its vulnerability to market downturns. This performance suggests a high-risk, high-reward strategy that may suit investors with a strong risk appetite. Comparing this to benchmarks can provide a clearer picture of relative performance.

Projection Info

The Monte Carlo analysis, a simulation using historical data to project future outcomes, suggests a wide range of potential returns. With a median (50th percentile) return of 2,514.9% and a 5th percentile return of 187.8%, the projections indicate both significant upside and risk. Notably, 994 out of 1,000 simulations resulted in positive returns, underscoring the portfolio's potential for growth. However, it's crucial to remember that past data doesn't guarantee future results, and diversification could help mitigate risks.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to other asset classes like bonds or cash. This 100% stock allocation aligns with a growth-oriented strategy but lacks the diversification benefits that other asset classes can provide. Diversifying into other asset classes could reduce volatility and provide more consistent returns across different market conditions. While stocks can offer high growth potential, including fixed-income assets could cushion against market fluctuations.

Sectors Info

  • Technology
    46%
  • Telecommunications
    26%
  • Health Care
    8%
  • Financials
    6%
  • Consumer Discretionary
    5%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in technology, which constitutes 46% of its holdings. While this sector has driven significant growth, it also introduces higher volatility, especially during periods of interest rate hikes or tech sector downturns. Other sectors like Communication Services and Healthcare provide some diversification but are still relatively small in comparison. Balancing sector allocations could mitigate sector-specific risks and provide more stable returns over time.

Regions Info

  • North America
    95%
  • Europe Developed
    4%
  • Asia Developed
    1%

With 95% of the portfolio's geographic allocation in North America, there is limited exposure to international markets. This concentration could lead to vulnerability if the U.S. market underperforms. While the current allocation has benefited from strong U.S. market performance, increasing exposure to Europe or Asia could enhance diversification and reduce reliance on a single economic region. This would also allow the portfolio to capitalize on growth opportunities in emerging markets.

Market capitalization Info

  • Mega-cap
    70%
  • Large-cap
    21%
  • Mid-cap
    8%

The portfolio is predominantly invested in mega-cap stocks, which make up 70% of the allocation. These large companies typically offer stability and are less volatile than smaller firms. However, the lack of small-cap exposure may limit potential high-growth opportunities. Introducing a more balanced mix of small and mid-cap stocks could enhance growth potential and provide a broader market exposure. This could also improve the portfolio's resilience to market shifts.

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 could potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve maximum returns for a given level of risk. While the portfolio is already growth-focused, fine-tuning the balance between high-growth and stable assets could enhance performance. This optimization doesn't imply diversification but rather a more strategic allocation of existing assets.

Dividends Info

  • Alphabet Inc Class A 0.30%
  • Micron Technology Inc 0.50%
  • Novo Nordisk A/S 1.70%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.68%

The portfolio's dividend yield is relatively low at 0.68%, reflecting its focus on growth stocks rather than income-generating assets. While dividends can provide a steady income stream, they are less critical in a growth-focused strategy. Investors seeking income may consider increasing allocations to higher-yielding stocks or dividend-focused ETFs. However, for those prioritizing capital appreciation, the current allocation aligns well with growth objectives.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.03%, largely due to the Vanguard S&P 500 ETF. This low cost structure supports long-term growth by minimizing the drag on returns. Keeping costs low is essential for maximizing net returns over time. Investors should continue to monitor fees and consider low-cost alternatives if introducing new assets. This approach ensures that more of the portfolio's returns are retained by the investor.

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