A growth-focused portfolio with a tech-heavy tilt and moderate risk exposure

Report created on Feb 3, 2025

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 predominantly of ETFs, with a strong focus on growth-oriented assets. The Vanguard S&P 500 Growth Index Fund ETF commands a significant 50% of the portfolio, indicating a preference for large-cap growth stocks. The Vanguard Financials Index Fund ETF and SPDR Morgan Stanley Technology ETF each hold 20%, while the Defiance Quantum ETF accounts for the remaining 10%. Compared to a typical benchmark, this allocation leans heavily towards growth sectors, with limited diversification across asset classes. To enhance balance, consider integrating additional asset classes such as bonds or international equities.

Growth Info

Historically, the portfolio has demonstrated a robust Compound Annual Growth Rate (CAGR) of 18.31%, suggesting strong past performance. However, it also experienced a significant maximum drawdown of -34.98%, highlighting vulnerability during market downturns. In comparison to a benchmark, these figures reflect a higher-risk, higher-reward strategy. While past performance is promising, it's important to remember that historical results do not guarantee future outcomes. Regularly reviewing performance against benchmarks can help ensure continued alignment with investment goals.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of returns. With a 50th percentile outcome of 858.1% and a 67th percentile of 1,367.1%, the projections indicate a favorable growth trajectory. However, the 5th percentile shows a return of 92.4%, underscoring the inherent uncertainty in future performance. While the simulation offers valuable insights, it's important to recognize its limitations, as it relies on historical data and assumptions. Regularly updating projections can help maintain a realistic view of potential outcomes.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily skewed towards equities, with 99% allocated to stocks and a mere 1% in cash. This allocation aligns with a growth-focused strategy but may expose the portfolio to higher volatility. Compared to benchmarks, the lack of fixed income or alternative asset classes could limit diversification benefits. To mitigate risk, consider introducing other asset classes, such as bonds or real estate, which can provide stability during market fluctuations. Balancing growth with diversification can enhance the portfolio's resilience over time.

Sectors Info

  • Technology
    45%
  • Financials
    25%
  • Telecommunications
    10%
  • Consumer Discretionary
    10%
  • Industrials
    5%
  • Health Care
    3%
  • Consumer Staples
    2%
  • Real Estate
    1%
  • Utilities
    1%

The sector allocation is heavily weighted towards technology, which comprises 45% of the portfolio. Financial services follow at 25%, while other sectors like communication services and consumer cyclicals hold smaller shares. This concentration in tech stocks may lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. Comparing to benchmarks, the sector distribution suggests a potential over-reliance on technology. To reduce sector-specific risk, consider diversifying into sectors with growth potential that may offer stability, such as healthcare or consumer staples.

Regions Info

  • North America
    93%
  • Europe Developed
    3%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Japan
    1%

Geographically, the portfolio is predominantly focused on North America, with 93% exposure. This concentration aligns with a preference for U.S. equities but limits global diversification. Compared to benchmarks, there is a notable underexposure to emerging markets, which could offer growth opportunities. To enhance geographic diversification, consider increasing allocations to international equities, particularly in regions like Asia or Europe. This approach can help mitigate risks associated with economic or political events in the U.S. and tap into global growth trends.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    36%
  • Mid-cap
    11%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization distribution leans towards mega-cap stocks, which comprise 48%, followed by big-cap at 36%. Medium, small, and micro-caps together account for the remaining 15%. This focus on larger companies aligns with a growth strategy but may limit exposure to potentially higher-growth small-cap stocks. Compared to benchmarks, the portfolio may benefit from increased diversification across market capitalizations. Including more small or medium-cap stocks can enhance growth potential and resilience, as these companies often offer unique opportunities that larger firms may not.

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 Efficient Frontier concept suggests that the portfolio could be optimized for a better risk-return ratio. By adjusting the allocation among existing assets, it's possible to achieve a more efficient balance. This optimization focuses solely on maximizing returns for a given level of risk, without altering the portfolio's overall diversification strategy. While the current allocation is growth-focused, exploring optimization opportunities can enhance performance. Regularly reassessing the portfolio's risk-return profile ensures it remains aligned with investment goals and adapts to changing market conditions.

Dividends Info

  • Defiance Quantum 0.60%
  • Vanguard Financials Index Fund ETF Shares 1.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • SPDR Morgan Stanley Technology 0.30%
  • Weighted yield (per year) 0.49%

The portfolio's dividend yield is relatively low at 0.49%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. Compared to income-focused portfolios, the lower yield aligns with the growth strategy, which typically involves reinvesting earnings for future gains. For investors seeking income, consider incorporating higher-yielding assets or dividend-focused funds to balance growth with income generation. Regularly reviewing the portfolio's yield can help ensure it meets evolving financial needs.

Ongoing product costs Info

  • Defiance Quantum 0.40%
  • Vanguard Financials Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • SPDR Morgan Stanley Technology 0.35%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low, supporting better long-term performance by minimizing costs. The Vanguard funds contribute to this efficiency with expense ratios of 0.10%, while the Defiance Quantum ETF is slightly higher at 0.40%. Compared to industry averages, the portfolio's costs are competitive, aligning with best practices for cost management. Maintaining low costs is essential for maximizing returns over time. Regularly reviewing and optimizing expense ratios can help sustain this advantage and ensure the portfolio remains cost-effective.

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