A growth-focused portfolio with a significant tilt towards technology and large-cap stocks

Report created on Feb 11, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Vanguard Russell 1000 Growth Index Fund ETF, which comprises 70% of the total allocation. This ETF focuses on large-cap growth stocks, providing a robust foundation for capital appreciation. The Defiance Quantum ETF and Vanguard Total International Stock Index Fund ETF each represent 15% of the portfolio, offering exposure to innovative technologies and international markets, respectively. Compared to a typical balanced portfolio, this allocation is more aggressive, prioritizing growth over stability. To enhance diversification, consider adding fixed-income assets or other sectors with lower representation.

Growth Info

Historically, the portfolio has performed remarkably well, with a Compound Annual Growth Rate (CAGR) of 17.97%. This impressive growth rate reflects the strong performance of growth stocks over the past decade. However, the portfolio also experienced a maximum drawdown of -33.12%, indicating significant volatility. During market downturns, portfolios with high drawdowns can be more stressful to hold. Comparing this to a benchmark index can provide further context, but the high returns suggest that the portfolio's aggressive growth strategy has been effective.

Projection Info

Using Monte Carlo simulations, which estimate potential future outcomes based on historical data, the portfolio shows promising projections. With an annualized return of 18.62%, the simulations suggest a strong likelihood of continued growth. However, it's important to note that past performance does not guarantee future results. The 5th percentile projection of 88.4% highlights potential downside risks, while the 67th percentile projection of 1,076.6% underscores the potential for significant gains. Regularly reviewing these projections can help in adjusting the strategy to align with changing market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is predominantly invested in stocks, with 99% allocated to equities. This high concentration in a single asset class can lead to substantial growth but also increases exposure to market volatility. A more diversified allocation, incorporating bonds or alternative assets, could help mitigate risk and provide more stable returns. While the current allocation suits an aggressive growth strategy, it may not be ideal for those seeking more balanced risk exposure. Assessing personal risk tolerance and investment goals can guide adjustments to the asset class distribution.

Sectors Info

  • Technology
    49%
  • Consumer Discretionary
    13%
  • Telecommunications
    11%
  • Financials
    8%
  • Industrials
    6%
  • Health Care
    6%
  • Consumer Staples
    3%
  • Basic Materials
    1%
  • Energy
    1%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio has a strong concentration in the technology sector, comprising 49% of the total allocation. While this focus has driven past growth, it also exposes the portfolio to sector-specific risks, such as regulatory changes or technological disruptions. Other sectors, such as consumer cyclicals and communication services, have moderate representation, while sectors like energy and utilities are underrepresented. Balancing sector allocations could reduce volatility and enhance diversification. For investors concerned about sector risks, evaluating potential adjustments to achieve a more even sector distribution may be beneficial.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, with 81% exposure. This concentration aligns with the strong performance of U.S. markets but also increases vulnerability to region-specific risks. The remaining allocation is distributed across Europe, Japan, and other regions, offering some international diversification. However, emerging markets have minimal representation, which could limit growth opportunities. To enhance geographic diversification, consider increasing exposure to underrepresented regions, particularly those with growth potential. This strategy could mitigate regional risks and capitalize on global market trends.

Market capitalization Info

  • Mega-cap
    57%
  • Large-cap
    27%
  • Mid-cap
    11%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization is predominantly in mega-cap stocks, which make up 57% of the allocation. These large companies provide stability and have historically delivered consistent returns. However, the focus on mega and big caps may limit exposure to the potentially higher growth of smaller companies. With only 4% in small-cap stocks, the portfolio could benefit from increased diversification across market capitalizations. By adjusting the allocation to include more small and medium-sized companies, investors might capture additional growth opportunities and enhance the portfolio's risk-return profile.

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 shows potential for optimization along the Efficient Frontier, which represents the best possible risk-return trade-off. By adjusting the allocation among existing assets, investors can potentially achieve a more optimal balance between risk and return. This process involves analyzing the current asset mix and identifying opportunities to enhance efficiency without introducing new assets. It's important to note that optimization focuses on maximizing returns for a given level of risk, rather than diversification. Regularly reassessing the portfolio's position on the Efficient Frontier can guide strategic adjustments.

Dividends Info

  • Defiance Quantum 0.60%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 0.85%

The portfolio's dividend yield is relatively modest at 0.85%, reflecting its growth-oriented focus. The Vanguard Total International Stock Index Fund ETF contributes the highest yield at 3.20%, providing some income stability. For investors seeking income, this yield may not be sufficient, and adjustments toward higher-dividend-paying assets could be considered. However, for those prioritizing capital appreciation, the current yield aligns with the portfolio's growth strategy. Balancing growth and income needs can help tailor the portfolio to meet specific financial goals and preferences.

Ongoing product costs Info

  • Defiance Quantum 0.40%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is low at 0.13%, which is advantageous for long-term performance. Lower costs mean more of the investment returns are retained, compounding over time. The Vanguard ETFs contribute to this cost efficiency, while the Defiance Quantum ETF has a higher expense ratio at 0.40%. Monitoring and managing costs is crucial for maximizing net returns. Investors should periodically review expense ratios and consider cost-effective alternatives if necessary. Overall, the current cost structure supports the portfolio's growth objectives effectively.

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