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

Report created on Dec 16, 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 the Schwab S&P 500 Index Fund, comprising nearly 66% of the total allocation. This shows a strong focus on large-cap U.S. equities. The rest is a mix of ETFs and individual stocks, with notable allocations to technology and growth sectors. This composition favors growth potential but may lack diversification in asset classes like bonds or real estate. It's important to have a balanced portfolio to mitigate risks associated with market volatility. Consider adding a mix of asset classes to cushion against potential downturns.

Growth Info

Historically, the portfolio has shown impressive growth with a compound annual growth rate (CAGR) of 19.51%. However, it has also experienced significant volatility, with a maximum drawdown of -54.61%. This indicates that while the portfolio can generate high returns, it also exposes investors to substantial risk. Past performance is not indicative of future results, and relying solely on historical data can be misleading. Diversifying the portfolio to include less volatile assets may help reduce potential drawdowns while maintaining growth potential.

Projection Info

Using Monte Carlo simulation, which involves running thousands of hypothetical scenarios based on historical data, the portfolio shows a median projected growth of 1,111.63% over the long term. However, projections are not guarantees and depend on historical trends continuing. The simulation's 5th percentile shows a potential downside of 157.86%, emphasizing the need for risk management. Consider diversifying investments to mitigate risks and potentially smooth out returns. Remember, simulations are based on past data and may not fully account for future market changes or unexpected events.

Asset classes Info

  • Stocks
    100%

This portfolio is predominantly composed of stocks, accounting for over 99% of the total allocation. This heavy reliance on equities suggests a strong growth orientation but also increases exposure to market volatility. Diversification across different asset classes, such as bonds or real estate, can help manage risk and provide more stable returns. Consider incorporating a more balanced mix of asset classes to create a portfolio that can withstand various market conditions while still aiming for growth.

Sectors Info

  • Technology
    44%
  • Financials
    11%
  • Health Care
    9%
  • Telecommunications
    7%
  • Industrials
    7%
  • Consumer Discretionary
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Consumer Discretionary
    2%

Technology dominates the sector allocation at over 44%, with other sectors like financial services and healthcare making up smaller portions. This concentration in tech indicates a high reliance on the sector's performance, which can be both an opportunity and a risk. While tech has driven significant growth, it also tends to be volatile. Balancing sector allocations by increasing exposure to underrepresented areas can help mitigate sector-specific risks and enhance overall portfolio stability.

Regions Info

  • North America
    93%
  • Asia Emerging
    2%
  • Europe Developed
    2%
  • Japan
    1%
  • Asia Developed
    1%
  • Africa/Middle East
    1%

The portfolio is heavily concentrated in North America, with over 92% of assets allocated there. This geographic focus provides exposure to stable, developed markets but limits diversification. Including more international assets can reduce regional risk and take advantage of growth opportunities in emerging markets. Consider increasing allocations to regions like Asia and Europe to enhance diversification and potentially benefit from global economic growth.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Schwab U.S. Large-Cap Value ETF
    High correlation

Assets like the Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Value ETF show high correlation, meaning they tend to move together. This reduces diversification benefits, as similar assets don't provide much risk reduction. Identifying and removing highly correlated assets can improve the portfolio's efficiency. Consider replacing them with assets that have lower correlation to each other, thereby enhancing diversification and potentially improving risk-adjusted returns.

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 could be optimized by adjusting the asset allocation along the Efficient Frontier, which seeks the best possible risk-return trade-off. Currently, the presence of highly correlated assets suggests room for improvement. By reallocating to less correlated investments, the portfolio can achieve a more efficient risk-return profile. Remember, optimization focuses on the current assets and their allocations, not necessarily adding new investments.

Dividends Info

  • First Trust NASDAQ Cybersecurity ETF 0.40%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Schwab Emerging Markets Equity ETF 0.10%
  • Schwab International Equity ETF 0.90%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. Large-Cap Value ETF 3.60%
  • Weighted yield (per year) 0.23%

The portfolio's dividend yield is relatively low at 0.23%, indicating a focus on capital appreciation rather than income generation. While dividends can provide a steady income stream, they are not the primary goal here. If income is a priority, consider increasing allocations to higher-yielding assets. However, ensure that this aligns with overall investment objectives, as focusing solely on dividends may limit growth potential.

Ongoing product costs Info

  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab Emerging Markets Equity ETF 0.11%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Large-Cap Value ETF 0.04%
  • Schwab S&P 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your returns stay in your pocket rather than going to fund managers. Regularly reviewing and minimizing costs can enhance portfolio performance over time. Consider replacing higher-cost funds with lower-cost alternatives that offer similar exposure to maximize net returns.

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