A growth-focused portfolio with a strong emphasis on US equities and moderate 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

The portfolio is heavily weighted towards the BlackRock S&P 500 Stock Fund Instl, which makes up 80.5% of the total allocation. This fund is complemented by smaller allocations to SoFi Technologies Inc. and three different ETFs, each accounting for 3.5% of the portfolio. The heavy concentration in a single fund suggests a focus on stability and growth through large-cap U.S. equities. However, this also limits diversification, as the majority of the portfolio is tied to the performance of the S&P 500. To enhance diversification, consider increasing allocations to other asset classes or regions.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 17.01%, indicating strong past performance. However, it also experienced a maximum drawdown of -31.04%, highlighting significant volatility. This performance reflects the inherent risk of a growth-oriented portfolio that heavily relies on U.S. equities. While past performance is not indicative of future results, understanding these trends can help set expectations. To mitigate potential downturns, consider diversifying into less correlated assets or sectors.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes based on historical data. With 1,000 simulations, the portfolio's results show a median return of 473.33%, with a downside risk at the 5th percentile of -48.46%. These projections highlight the portfolio's potential for high returns, but also underscore the risk of significant losses. While useful for understanding potential risks and rewards, simulations rely on historical data and cannot predict future market conditions. Regularly reviewing and adjusting the portfolio can help manage these risks.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, accounting for nearly 100% of the allocation. This heavy focus on equities can lead to high returns, but also exposes the portfolio to market volatility. Minimal allocations to cash, bonds, and other asset classes indicate a lack of diversification, which can be risky in turbulent markets. Diversifying into fixed income or alternative investments can provide stability and reduce volatility. Consider rebalancing to include a broader range of asset classes to achieve a more balanced risk profile.

Sectors Info

  • Technology
    27%
  • Financials
    22%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Consumer Discretionary
    2%

The portfolio is concentrated in the technology and financial services sectors, which together comprise nearly 49% of the allocation. While these sectors have driven substantial growth, they also introduce sector-specific risks. A downturn in either sector could significantly impact overall performance. To mitigate this risk, consider spreading investments across a wider array of sectors. This can help balance the portfolio and reduce reliance on the performance of a few key industries.

Regions Info

  • North America
    93%
  • Europe Developed
    4%
  • Japan
    2%
  • Australasia
    1%

With 93.19% of the portfolio allocated to North America, geographic diversification is limited. This high concentration in a single region increases exposure to regional economic and political risks. While North American markets, particularly the U.S., have shown strong performance, diversifying into international markets can provide exposure to different growth opportunities and reduce regional risk. Consider increasing allocations to emerging markets or other developed regions to enhance geographic diversification.

Redundant positions Info

  • Schwab Fundamental International Large Company Index ETF
    Avantis® International Small Cap Value ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Schwab Fundamental International Large Company Index ETF and the Avantis® International Small Cap Value ETF. High correlation means these assets tend to move together, offering limited diversification benefits. This can increase portfolio risk during market downturns. To improve diversification, consider replacing or reducing allocations to correlated assets. Selecting investments with lower correlation can help mitigate risk and enhance overall portfolio 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.

Click on the colored dots to explore allocations.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves reallocating existing assets to achieve a more efficient balance. Currently, the portfolio's heavy concentration in a single fund limits its efficiency. By diversifying across different asset classes and reducing correlated assets, the portfolio can potentially achieve a better risk-return balance. Regularly reviewing asset allocation and making adjustments based on market conditions can help maintain optimal efficiency.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • BlackRock S&P 500 Stock Fund Instl 0.80%
  • Schwab Fundamental International Large Company Index ETF 0.90%
  • Weighted yield (per year) 0.83%

The portfolio's dividend yield is relatively low at 0.83%, reflecting its growth-oriented strategy. While dividends can provide a steady income stream, the focus here is on capital appreciation rather than income generation. Investors seeking regular income may need to adjust their strategy or incorporate higher-yielding assets. Evaluating the balance between growth and income can help align the portfolio with financial goals. For those prioritizing income, consider increasing allocations to dividend-paying stocks or funds.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • BlackRock S&P 500 Stock Fund Instl 0.10%
  • Schwab Fundamental International Large Company Index ETF 0.25%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, indicating low investment costs. This is beneficial for long-term returns, as lower costs mean more of the investment's returns are retained. However, some individual ETFs have higher expense ratios, which could be reduced by selecting more cost-effective alternatives. Regularly reviewing and optimizing fund selections can help minimize fees. Consider replacing higher-cost funds with lower-cost options to improve net returns without sacrificing performance.

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