A growth-focused portfolio with high equity concentration and limited geographic diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a high risk tolerance seeking aggressive growth over a long-term horizon. It is heavily weighted towards equities, emphasizing capital appreciation rather than income generation. Such an investor is likely comfortable with market volatility and the potential for significant drawdowns, focusing on maximizing returns over time. The portfolio's concentration in specific sectors and regions may appeal to those confident in these areas' continued growth prospects.

Positions

  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Pacer US Small Cap Cash Cows 100 ETF
    CALF - US69374H8575
    10.00%
  • Pacer US Cash Cows 100 ETF
    COWZ - US69374H8815
    10.00%
  • WisdomTree U.S. Quality Dividend Growth Fund
    DGRW - US97717X6691
    10.00%
  • iShares Morningstar Mid-Cap Growth ETF
    IMCG - US4642883072
    10.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    10.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    10.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    10.00%
  • SPDR® Portfolio S&P 500 ETF
    SPLG - US78464A8541
    10.00%
  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    10.00%

This portfolio is composed entirely of ETFs, each making up 10% of the total. The focus is heavily on equities, with a minuscule amount in cash, making it highly concentrated in stocks. The even distribution across ETFs suggests an attempt to balance within the stock category, but the lack of diversity across asset classes could expose the portfolio to higher volatility. While stocks can offer substantial growth potential, they also come with increased risk, especially without the balancing effect of bonds or other asset classes. Consider diversifying into other asset classes to manage risk better.

Growth Info

Historically, this portfolio has performed impressively with a compound annual growth rate (CAGR) of 18.77%. However, it experienced a significant maximum drawdown of -25.54%, indicating vulnerability during market downturns. While past performance can provide insights, it's not a guarantee of future results. The concentration in equities may have driven the high returns, but it also contributed to the high drawdown. To mitigate risk, consider introducing assets that historically perform well during downturns.

Projection Info

The forward projection using Monte Carlo simulation suggests a wide range of potential outcomes, with a median return of 972.71%. This method uses historical data to simulate potential future performance scenarios, providing a probabilistic view rather than a prediction. While 996 out of 1,000 simulations resulted in positive returns, the variance highlights uncertainty. Relying solely on historical data can be misleading, as it doesn't account for unprecedented market events. Regularly revisiting the portfolio's risk exposure is advisable.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly invested in stocks, with nearly no allocation to cash or other asset classes. This lack of diversification across asset classes increases the portfolio's risk, as it is highly susceptible to equity market fluctuations. While stocks can offer high returns, they also bring significant volatility. To enhance stability, consider incorporating fixed income or alternative investments, which can provide a buffer during equity market downturns.

Sectors

  • Technology
    35%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Financials
    10%
  • Health Care
    8%
  • Energy
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is heavily skewed towards technology, which comprises over 35% of the portfolio. While the tech sector has been a strong performer, this concentration increases exposure to sector-specific risks. Other sectors like consumer cyclicals and industrials have moderate representation, but areas like utilities and real estate are underrepresented. A more balanced sector allocation could help mitigate risks associated with sector downturns. Consider adjusting weights to ensure no single sector dominates the portfolio.

Regions

  • North America
    97%
  • Asia Developed
    1%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is predominantly invested in North America, with over 97% exposure. This lack of international diversification can limit growth opportunities and increase vulnerability to regional economic downturns. While North American markets have shown strong performance, global diversification can enhance returns and reduce risk by capturing growth in other regions. Consider increasing exposure to developed and emerging markets outside North America for better geographic balance.

Redundant positions

  • SPDR® Portfolio S&P 500 ETF
    WisdomTree U.S. Quality Dividend Growth Fund
    High correlation
  • Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly within the S&P 500 and NASDAQ ETFs. This correlation suggests that these assets move together, providing little diversification benefit. Highly correlated assets can amplify portfolio risk, as they tend to react similarly to market events. To improve diversification, consider replacing some correlated ETFs with those that have historically shown lower correlation, thus reducing the portfolio's overall risk.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Pacer US Small Cap Cash Cows 100 ETF 1.10%
  • Pacer US Cash Cows 100 ETF 1.80%
  • WisdomTree U.S. Quality Dividend Growth Fund 1.50%
  • iShares Morningstar Mid-Cap Growth ETF 0.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • VanEck Semiconductor ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Invesco S&P 500® Momentum ETF 0.40%
  • Weighted yield (per year) 0.95%

The portfolio's total dividend yield is relatively low at 0.95%, indicating a focus on growth over income. While growth stocks can lead to significant capital appreciation, dividends provide a steady income stream and can enhance total returns, especially in volatile markets. For investors seeking income, consider increasing allocation to dividend-focused ETFs or stocks with a higher yield. This shift can offer a more balanced approach between growth and income.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Pacer US Small Cap Cash Cows 100 ETF 0.59%
  • Pacer US Cash Cows 100 ETF 0.49%
  • WisdomTree U.S. Quality Dividend Growth Fund 0.28%
  • iShares Morningstar Mid-Cap Growth ETF 0.06%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Weighted costs total (per year) 0.24%

With a total expense ratio (TER) of 0.24%, the portfolio's costs are moderate. However, some ETFs, like the Pacer US Small Cap Cash Cows 100 ETF, have higher fees. Over time, these costs can erode returns, especially in a growth-focused portfolio. Consider evaluating each ETF's expense ratio against its performance and potential alternatives. Reducing costs by selecting lower-fee options can improve net returns, enhancing the portfolio's long-term performance.

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.

The portfolio's current asset allocation may not be on the Efficient Frontier, which represents the optimal balance of risk and return. By focusing on the current assets and adjusting their weights, the portfolio could achieve a better risk-return ratio. This optimization process involves identifying and removing highly correlated or underperforming assets and reallocating to those that contribute more effectively to the portfolio's objectives. Regularly reviewing and optimizing can help maintain efficiency.

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