A growth-focused portfolio with high stock allocation and low geographic diversification

Report created on Jan 3, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards stocks, comprising nearly 100% of the assets, with a small cash position. This composition is typical for growth-focused portfolios, which prioritize capital appreciation over income. While the allocation aligns with growth objectives, it lacks diversification across asset classes. To enhance resilience, consider incorporating other asset types like bonds or real estate, which can provide stability and income during market downturns.

Growth Info

Historically, the portfolio has achieved a strong Compound Annual Growth Rate (CAGR) of 16.02%, indicating robust growth. However, it experienced a significant maximum drawdown of -34.79%, reflecting vulnerability during market declines. This performance suggests a high-risk, high-reward strategy. To mitigate potential losses, consider diversifying or adjusting asset weights to reduce volatility while maintaining growth potential.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, indicates positive prospects. The median (50th percentile) projection shows a 608.29% return, with most simulations yielding positive results. However, remember that simulations are based on past trends and can't predict future performance with certainty. Regularly review and adjust the portfolio to align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely comprised of stocks, resulting in limited diversification across asset classes. This concentration increases exposure to market volatility. In comparison, a balanced portfolio often includes a mix of stocks, bonds, and other assets to spread risk. Adding non-stock assets could help manage risk and provide more consistent returns over time, especially during periods of stock market instability.

Sectors Info

  • Financials
    27%
  • Technology
    27%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Consumer Discretionary
    2%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in Financial Services and Technology, together accounting for over half of the total allocation. This sector concentration can lead to increased volatility, especially if these industries face downturns. A more balanced sector allocation, similar to common benchmarks, can reduce risk and enhance stability. Consider gradually increasing exposure to underrepresented sectors to achieve better diversification.

Regions Info

  • North America
    100%

The portfolio is overwhelmingly focused on North America, with minimal exposure to international markets. While this may benefit from strong U.S. market performance, it limits diversification and potential growth from global opportunities. Expanding geographic exposure can mitigate regional risks and capture growth in emerging and developed markets outside North America, aligning better with global benchmarks.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    FIDELITY ZERO LARGE CAP INDEX FUND
    SPDR® Portfolio S&P 500 ETF
    High correlation

Several assets in the portfolio, including the Schwab U.S. Large-Cap Growth ETF, are highly correlated. High correlation means these assets tend to move together, reducing the diversification benefits. In a downturn, this can amplify losses. To enhance diversification, consider replacing or reducing exposure to these correlated assets with alternatives that have lower correlation, thereby improving 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.

Before pursuing optimization through the Efficient Frontier, focus on reducing overlap among highly correlated assets. The Efficient Frontier aims for the best risk-return balance using existing assets. By first addressing correlation, you can enhance diversification, potentially leading to a more efficient allocation. Once revised, employ optimization techniques to maximize returns for a given risk level.

Dividends Info

  • JPMorgan Chase & Co 1.90%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.37%

The portfolio's dividend yield stands at 1.37%, with contributions mainly from the Schwab U.S. Dividend Equity ETF and JPMorgan Chase & Co. Dividends can provide a steady income stream, which is valuable for reinvestment or income needs. For growth-focused investors, reinvesting dividends can enhance compounding returns. If income is a priority, consider increasing exposure to high-dividend assets while balancing growth objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.02%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.02%. Low costs are crucial for maximizing long-term returns, as fees can significantly erode gains over time. This efficiency supports the portfolio's growth objectives by minimizing expenses. Continue to monitor and compare fees across similar investments to ensure cost-effectiveness is maintained, particularly if asset changes are made.

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