A growth-focused portfolio with technology dominance and moderate geographic diversification

Report created on Jan 2, 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 predominantly composed of ETFs, with a significant 27.07% allocation to the Invesco NASDAQ 100 ETF. This reflects a strong inclination towards technology and growth stocks. Common stocks make up a smaller portion, led by MicroStrategy Incorporated at 9.76%. Compared to typical growth benchmarks, this portfolio leans heavily on large-cap growth equities, which can offer high returns but also come with increased volatility. To achieve a more balanced composition, consider increasing allocations to other asset types like fixed income or commodities, which can help stabilize returns during market downturns.

Growth Info

Historically, the portfolio has demonstrated impressive growth with a Compound Annual Growth Rate (CAGR) of 37.83%. This indicates a high return potential, albeit with a max drawdown of -24.19%, highlighting significant volatility. The concentration in high-growth sectors likely contributed to this performance. However, it's crucial to remember that past performance doesn't guarantee future results. To mitigate potential risks, consider diversifying further across different asset classes or sectors to cushion against future market fluctuations.

Projection Info

Utilizing Monte Carlo simulations, which use historical data to predict future outcomes, the portfolio shows a wide range of potential returns. The median projection suggests a substantial growth of 3,817.39%, while the 5th percentile indicates a risk of only a 47.45% increase. Although most simulations result in positive returns, the variability underscores the inherent risks. It's essential to regularly review and adjust the portfolio to align with evolving market conditions and personal risk tolerance, ensuring it stays on track to meet long-term objectives.

Asset classes Info

  • Stocks
    91%
  • Other
    9%

The portfolio is heavily weighted towards stocks, comprising over 91% of the total allocation. This skew towards equities aligns with a growth investment strategy, aiming for capital appreciation. However, such concentration can increase vulnerability to market volatility. Compared to a more balanced allocation, which might include bonds or other fixed-income assets, this portfolio could benefit from greater stability. Introducing a modest allocation to bonds or alternative investments could enhance diversification and provide a buffer during market downturns.

Sectors Info

  • Technology
    36%
  • Consumer Discretionary
    13%
  • Health Care
    11%
  • Industrials
    7%
  • Telecommunications
    7%
  • Real Estate
    6%
  • Financials
    4%
  • Consumer Staples
    3%
  • Utilities
    2%
  • Energy
    1%
  • Basic Materials
    1%

Technology dominates the sector allocation at 36%, which is significantly higher than typical benchmarks. This concentration suggests a high growth potential but also exposes the portfolio to sector-specific risks, especially during periods of regulatory changes or tech industry downturns. Other sectors like healthcare and consumer cyclicals offer some balance, but their lower allocations limit their impact. Consider rebalancing to increase exposure to underrepresented sectors, which could provide additional growth opportunities and reduce overall portfolio risk.

Regions Info

  • North America
    86%
  • Asia Emerging
    4%
  • Europe Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for 86% of the allocation. While this reflects a focus on familiar markets, it limits exposure to international growth opportunities. Emerging markets, which are underrepresented, can offer diversification benefits and potential for higher returns. To enhance geographic diversification, consider increasing allocations to regions like Asia or Europe, which may provide growth opportunities and mitigate risks associated with regional economic downturns.

Redundant positions Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    High correlation
  • Health Care Select Sector SPDR® Fund
    Vanguard Health Care Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly within the technology and healthcare sectors. High correlation means these assets tend to move together, reducing diversification benefits. For example, the Vanguard Russell 1000 Growth Index Fund ETF Shares and Invesco NASDAQ 100 ETF are closely linked. Reducing overlap by selecting distinct funds or stocks can improve diversification and risk management. This approach helps ensure that not all investments are affected similarly during market downturns, enhancing overall portfolio resilience.

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 be optimized for a better risk-return ratio using the Efficient Frontier, which suggests the best possible allocation for a given level of risk. Currently, the portfolio's expected return is slightly below the optimal level. By adjusting the allocation among existing assets, particularly by reducing highly correlated holdings, the portfolio could achieve a more efficient balance. This optimization focuses on maximizing returns for the same level of risk, enhancing overall performance without necessarily increasing diversification.

Dividends Info

  • Alibaba Group Holding Ltd 0.80%
  • Dimensional ETF Trust - Dimensional Gloabl Real Estate ETF 1.70%
  • Quanta Services Inc 0.10%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Virtus Reaves Utilities ETF 1.10%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard Industrials Index Fund ETF Shares 0.80%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Health Care Select Sector SPDR® Fund 1.20%
  • Weighted yield (per year) 0.73%

The portfolio's dividend yield is relatively low at 0.73%, reflecting its growth-oriented strategy. While dividends are not a primary focus, they can provide a steady income stream, especially during volatile market periods. The Schwab U.S. Dividend Equity ETF offers the highest yield at 3.6%, contributing to income generation. If income is a goal, consider increasing allocations to dividend-paying assets, balancing growth with stability. This can help offset potential losses during market downturns and provide a more consistent return profile.

Ongoing product costs Info

  • Dimensional ETF Trust - Dimensional Gloabl Real Estate ETF 0.22%
  • SPDR® Gold Shares 0.40%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Virtus Reaves Utilities ETF 0.49%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard Industrials Index Fund ETF Shares 0.10%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Health Care Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is impressively low at 0.12%, supporting better long-term performance by minimizing costs. Lower fees mean more of your investment returns stay in your pocket, enhancing compounding effects over time. This cost efficiency aligns well with best practices in portfolio management. Continue to monitor and evaluate the cost-effectiveness of each holding, ensuring that any changes maintain or improve the overall cost structure. Opting for low-cost ETFs or funds can further optimize returns.

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