Moderately diversified growth portfolio with strong US focus and tech-heavy allocation

Report created on Dec 14, 2024

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 composed of a mix of ETFs and individual stocks, with a significant focus on technology and the S&P 500. The allocation includes 15% in both Vanguard Information Technology Index Fund and Vanguard S&P 500 ETF, 12% each in Amazon, Alphabet, and Tesla, and the remainder in bond and real estate ETFs. This structure suggests a growth-oriented strategy, leveraging both broad market exposure and specific high-growth tech stocks. For investors, such a composition can offer potential for high returns but also increased volatility. To optimize, consider balancing with more stable asset classes or sectors to mitigate risks.

Growth Info

Historically, this portfolio has shown a strong compound annual growth rate (CAGR) of 21.32%, indicating robust performance. However, the maximum drawdown of -46.01% highlights significant volatility, which can be concerning for risk-averse investors. This pattern suggests that while the portfolio has the potential for high returns, it is also susceptible to substantial losses during market downturns. For those concerned about risk, consider strategies to reduce drawdowns, such as diversifying into less volatile assets or employing hedging strategies.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median return of 765.51% and a 5th percentile return of 30.27%. These simulations use historical data to model future possibilities, but they cannot predict exact outcomes and should be viewed as one of many tools in decision-making. The positive skew in the simulations suggests a high probability of positive returns, aligning with the growth focus. To refine expectations, consider stress testing the portfolio under various market conditions to understand potential impacts.

Asset classes Info

  • Stocks
    75%
  • Cash
    10%
  • Bonds
    10%
  • Real Estate
    5%

The portfolio's asset class distribution is heavily weighted toward stocks at 74.79%, with smaller allocations to cash, bonds, and real estate. This stock-heavy allocation aligns with a growth strategy but may lack balance. Diversification across asset classes can reduce risk and improve stability. Consider increasing exposure to bonds or other fixed-income securities to provide a cushion during market downturns. This can help smooth out returns and offer a more stable investment experience.

Sectors Info

  • Consumer Discretionary
    27%
  • Technology
    21%
  • Telecommunications
    14%
  • Real Estate
    6%
  • Financials
    4%
  • Industrials
    3%
  • Health Care
    3%
  • Consumer Staples
    1%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%

Sector allocation reveals a concentration in consumer cyclicals and technology, representing 26.53% and 21.01% of the portfolio, respectively. While these sectors have potential for high growth, they are also subject to higher volatility and economic sensitivity. A more balanced sector allocation might include increasing exposure to defensive sectors like healthcare or utilities, which tend to perform better during economic downturns. This could provide more consistent returns and reduce overall portfolio risk.

Regions Info

  • North America
    71%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 71.47% allocation. This heavy regional concentration can expose the portfolio to risks specific to the US market, such as economic downturns or policy changes. To enhance geographic diversification, consider increasing allocations to international markets. This can help mitigate region-specific risks and tap into growth opportunities in emerging markets, offering a more balanced global exposure.

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.

Utilizing the Efficient Frontier, the portfolio can potentially be optimized for a better risk-return ratio. Current analysis suggests that a more efficient portfolio could achieve an expected return of 2.70% with a lower risk level. This involves adjusting the asset allocation to achieve the best possible risk-return balance using existing assets. Regularly reassessing the portfolio's positioning relative to the Efficient Frontier can help maintain optimal performance as market conditions and personal goals evolve.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Alphabet Inc Class C 0.20%
  • iShares® 0-3 Month Treasury Bond ETF 5.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Real Estate Index Fund ETF Shares 3.90%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.64%

The portfolio's dividend yield stands at 1.64%, with contributions from various ETFs and stocks. While not a primary focus for growth investors, dividends can provide a steady income stream and enhance total returns. If income generation is a priority, consider increasing allocations to high-dividend-paying stocks or ETFs. This can offer both growth potential and regular income, providing a more comprehensive investment approach that caters to diverse financial goals.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio exhibits a low total expense ratio (TER) of 0.04%, reflecting cost-effective investment choices. Keeping costs low is crucial, as high fees can erode returns over time. To further optimize cost efficiency, regularly review the expense ratios of existing holdings and consider switching to lower-cost alternatives if available. This can be particularly beneficial in maintaining long-term growth, as even small reductions in costs can significantly impact overall portfolio performance.

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