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

Report created on Apr 25, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily invested in ETFs, with the Invesco QQQ Trust and Vanguard S&P 500 ETF comprising nearly half of the total allocation. This concentration reflects a strong emphasis on large-cap U.S. equities, which can offer stability and growth potential. However, the lack of diversification into other asset classes like bonds or international equities could increase risk during market downturns. To enhance diversification, consider incorporating assets with different risk profiles, such as fixed income or international equities, to balance the portfolio's growth focus.

Growth Info

With a historical CAGR of 16.74%, the portfolio has demonstrated robust growth, significantly outperforming typical market benchmarks. However, the maximum drawdown of -32.09% highlights potential vulnerability during market corrections. The concentration in large-cap U.S. equities has been a major growth driver, but it also increases exposure to market volatility. To mitigate risk, consider diversifying into assets that historically perform well during downturns, such as defensive sectors or fixed-income securities.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential outcomes, indicates a median portfolio value increase of 633.2% with a 50th percentile return. While 993 out of 1,000 simulations show positive returns, it's important to remember that these projections are based on past performance and do not guarantee future results. The high variance in simulated outcomes suggests a need for ongoing risk assessment and potential rebalancing to align with changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking exposure to other asset classes like bonds or real estate. This singular focus can amplify returns in a bull market but also heightens risk during downturns. Diversifying into different asset classes can provide a buffer against market volatility and potentially improve the risk-return profile. Consider adding fixed-income securities or real estate investments to introduce stability and income generation.

Sectors Info

  • Technology
    31%
  • Health Care
    12%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    9%
  • Consumer Staples
    8%
  • Industrials
    8%
  • Energy
    5%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

With a 31% allocation to technology, the portfolio is heavily weighted toward this sector, which can lead to increased volatility, especially during periods of interest rate hikes. While tech stocks have driven significant growth, they also come with higher risk. Balancing this with investments in more stable sectors, such as consumer defensive or utilities, could reduce volatility and provide a hedge against tech sector downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic allocation is overwhelmingly concentrated in North America, at 99%, which limits exposure to global growth opportunities and increases vulnerability to U.S.-specific economic risks. Introducing more international equities, especially from emerging markets, could enhance diversification and capture growth in other regions. A more balanced geographic distribution can mitigate risks associated with economic downturns in a single region.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    35%
  • Mid-cap
    22%
  • Small-cap
    4%

The portfolio's market capitalization is skewed towards mega and big-cap stocks, making up 73%. While these companies offer stability and reliable growth, the limited exposure to small and mid-cap stocks may restrict potential for higher returns. Increasing allocation to smaller companies can enhance growth prospects, albeit with increased volatility. A balanced mix across market caps can optimize the portfolio for both growth and risk management.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Distillate US Fundamental Stability & Value
    Schwab Fundamental U.S. Large Company Index ETF
    High correlation
  • Schwab U.S. Large-Cap Growth ETF
    Invesco QQQ Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, particularly among U.S. large-cap ETFs, which can limit diversification benefits. This correlation means that during market downturns, the portfolio may not be as resilient as more diversified portfolios. To improve diversification, consider reducing overlap by selecting assets with lower correlation, such as international equities or alternative investments, which can behave differently under various market conditions.

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 focuses on achieving the best possible risk-return ratio with the current assets. By adjusting the allocation among existing holdings, the portfolio can potentially enhance returns for a given level of risk. However, this optimization does not address diversification beyond the current asset mix. Consider whether the current asset allocation aligns with your risk tolerance and investment goals.

Dividends Info

  • Distillate US Fundamental Stability & Value 1.50%
  • Schwab Fundamental U.S. Large Company Index ETF 1.90%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 4.00%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard S&P 500 ETF 1.40%
  • Weighted yield (per year) 1.42%

The portfolio's total dividend yield is 1.42%, with the Schwab U.S. Dividend Equity ETF providing the highest yield at 4.00%. While dividends contribute to total returns, the focus on growth-oriented ETFs suggests a primary goal of capital appreciation. For those seeking income, increasing allocation to higher-yielding assets could enhance cash flow. However, maintaining a balance between growth and income is key to achieving long-term financial goals.

Ongoing product costs Info

  • Distillate US Fundamental Stability & Value 0.39%
  • Schwab Fundamental U.S. Large Company Index ETF 0.25%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is relatively low and advantageous for long-term performance. Low costs mean more of your investment returns stay in your pocket, compounding over time. Despite the low TER, it's important to periodically review the cost structure to ensure it remains competitive. Consider the impact of any changes in fund fees on overall returns and explore lower-cost alternatives if necessary.

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