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

Report created on Dec 18, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards stocks, with a dominant focus on ETFs, representing over 99% of total assets. The Vanguard S&P 500 ETF and iShares MSCI World ETF form the backbone, together making up over 55% of the portfolio. Significant investments in individual stocks like ASML Holding NV and Apple Inc highlight a tech-centric approach. This composition suggests a growth-oriented strategy, aiming for capital appreciation over income generation. While ETFs provide broad market exposure, individual stocks offer specific sector bets. To maintain balance, consider reassessing the weight of individual stocks relative to ETFs, ensuring alignment with your growth objectives and risk tolerance.

Growth Info

Historically, this portfolio has demonstrated impressive returns, with a Compound Annual Growth Rate (CAGR) of 22.84%. However, it's also experienced significant volatility, evidenced by a maximum drawdown of -32.06%. This means that while the portfolio has had strong growth, it has also faced substantial declines. Understanding these metrics helps investors gauge the risk-return trade-off. To mitigate potential downturns, consider diversifying further or incorporating defensive assets. Remember, past performance isn't always indicative of future results, so it's crucial to remain vigilant and adaptable to changing market conditions.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes based on historical data. With 1,000 simulations, this portfolio's annualized return is projected at 36.34%, with a 50th percentile outcome suggesting significant growth. However, projections show a wide range, from a 5th percentile return of 173.92% to a 67th percentile of 6,344.38%. While these models offer insights, they rely on historical data, which may not account for future market shifts. Use these projections as a guide, not a guarantee, and consider stress-testing your portfolio against various economic scenarios to prepare for uncertainties.

Asset classes Info

  • Stocks
    100%

The allocation is overwhelmingly skewed towards stocks, with negligible exposure to other asset classes like cash or bonds. This heavy stock concentration can lead to higher volatility, especially in turbulent markets. While stocks offer growth potential, diversifying into other asset classes can provide stability and reduce risk. Consider gradually introducing bonds or alternative investments to balance the portfolio. This approach can help cushion against market downturns, ensuring a smoother ride towards your financial goals. Diversification across asset classes is a key strategy for long-term investment success.

Sectors Info

  • Technology
    42%
  • Financials
    16%
  • Consumer Discretionary
    12%
  • Consumer Staples
    8%
  • Health Care
    6%
  • Telecommunications
    5%
  • Industrials
    5%
  • Energy
    2%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Technology dominates this portfolio, accounting for over 42% of sector exposure. While tech stocks have driven recent market gains, their volatility can pose risks. Financial services and consumer cyclicals also have significant allocations, providing some sectoral balance. However, sectors like healthcare and industrials are underrepresented. To enhance diversification, consider reallocating some tech exposure to sectors with different economic cycles. This strategy can help mitigate risks associated with sector-specific downturns, ensuring a more resilient portfolio. A balanced sectoral approach can provide stability and capitalize on diverse growth opportunities.

Regions Info

  • North America
    83%
  • Europe Developed
    14%
  • Japan
    1%
  • Asia Developed
    1%

The portfolio's geographic exposure is heavily concentrated in North America, with over 83% allocation, followed by Europe Developed. This concentration can lead to region-specific risks, particularly if economic conditions in these areas deteriorate. While this focus can benefit from the stability of developed markets, it may miss growth opportunities in emerging regions. To enhance geographic diversification, consider increasing exposure to Asia, Latin America, or other emerging markets. This strategy can capture growth in rapidly developing economies, balancing the portfolio's regional risks and potential rewards.

Redundant positions Info

  • Vanguard S&P 500 ETF
    iShares MSCI World ETF
    High correlation

The portfolio's assets show high correlation, particularly between the Vanguard S&P 500 ETF and iShares MSCI World ETF. High correlation means these assets tend to move together, reducing diversification benefits. While correlated assets can amplify gains, they also increase risk during downturns. To manage this, consider adding assets with lower correlation, such as bonds or alternative investments. Diversifying asset types can help smooth returns and reduce overall portfolio volatility. Understanding asset correlation is crucial for effective risk management and optimizing the 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 current portfolio may benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation between existing assets, one can potentially enhance returns without increasing risk. The key is to balance high-growth assets with those that offer stability. Before optimizing, address the high correlation between certain ETFs to ensure true diversification. Remember, optimization focuses on the current asset pool, so periodically reassess to adapt to market changes. An efficient portfolio aligns with your risk tolerance and financial objectives.

Dividends Info

  • Apple Inc 0.40%
  • ASML Holding NV ADR 0.90%
  • Costco Wholesale Corp 2.00%
  • iShares MSCI World ETF 1.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.93%

The portfolio's dividend yield is modest, with an overall yield of 0.93%. Individual stocks like Costco Wholesale Corp and ETFs like iShares MSCI World ETF contribute to this yield. While dividends provide a steady income stream, this portfolio prioritizes growth over income. For those seeking higher income, consider reallocating to higher-yielding stocks or dividend-focused ETFs. Balancing growth and income can create a more comprehensive investment strategy, catering to both immediate cash flow needs and long-term appreciation goals. Dividend reinvestment can also enhance compounding effects over time.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • iShares MSCI World ETF 0.24%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.09%

With a total expense ratio (TER) of 0.09%, this portfolio is cost-efficient, minimizing the drag on returns. The Vanguard S&P 500 ETF, with its low cost of 0.03%, significantly contributes to this efficiency. While costs are minimal, it's essential to remain vigilant about any changes. High fees can erode returns over time, so periodically review and optimize expenses. Consider cost-effective alternatives if any existing holdings increase their fees. Maintaining a low-cost portfolio is a key component of maximizing net returns and achieving long-term financial goals.

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