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

Report created on Dec 27, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 94% in stocks and a modest allocation to gold. The Vanguard S&P 500 ETF dominates at 55%, signaling a strong focus on large-cap U.S. equities. This composition aligns with a growth strategy but lacks diversification into bonds or cash, which could buffer against volatility. Balancing with other asset classes could enhance stability. Consider adding fixed-income assets to mitigate risk and provide income, especially in volatile markets.

Growth Info

Historically, this portfolio has delivered a robust CAGR of 15.14%, outperforming typical market benchmarks. However, it experienced a significant maximum drawdown of -32.42%, reflecting vulnerability during market downturns. While past performance is not indicative of future results, understanding these trends helps set realistic expectations. To manage potential downturns, consider diversifying into less volatile assets or sectors, which could provide a cushion during market corrections.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with an average annualized return of 13.2%. This method uses historical data to simulate future performance, but it cannot predict actual future events. The 5th percentile suggests a potential downside of 25.88%, while the 67th percentile indicates a substantial upside of 562.89%. To improve confidence in future returns, consider refining asset allocation to reduce downside risk while maintaining growth potential.

Asset classes Info

  • Stocks
    94%
  • Other
    5%

The portfolio's asset class allocation heavily favors stocks, with minimal exposure to bonds and other assets. This concentration can lead to higher volatility and risk. Diversification across asset classes, such as bonds or real estate, can help manage risk and smooth returns over time. Comparing to benchmarks, a more balanced allocation typically includes a mix of equities, bonds, and alternative assets, which could enhance overall stability and return potential.

Sectors Info

  • Technology
    36%
  • Financials
    11%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

With 35.8% in technology, this portfolio is significantly tech-heavy, exposing it to sector-specific risks like regulatory changes or tech market corrections. Other sectors like financial services and consumer cyclicals are also represented but to a lesser extent. This concentration could lead to higher volatility, especially in times of tech market instability. Consider diversifying into underrepresented sectors to reduce risk and capture growth opportunities in other areas.

Regions Info

  • North America
    81%
  • Europe Developed
    4%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%

The portfolio is predominantly focused on North America, with 80.9% exposure, limiting geographic diversification. This concentration may increase vulnerability to regional economic downturns. Expanding exposure to other regions, such as emerging markets or Europe, could enhance diversification and potentially capture growth in different economic cycles. Aligning geographic allocation with global benchmarks can provide a more balanced risk-return profile.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation
  • SPDR S&P World ex US
    Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares
    High correlation

Highly correlated assets, such as the Vanguard Information Technology Index Fund ETF Shares and Schwab U.S. Large-Cap Growth ETF, indicate limited diversification benefits. When assets move together, the portfolio may experience amplified volatility during market swings. Reducing correlation by incorporating assets with different return patterns can improve diversification and risk management. Consider reallocating to less correlated sectors or asset classes.

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 can be optimized using the Efficient Frontier to achieve a better risk-return ratio. This involves reallocating assets to maximize returns for a given risk level. The current portfolio's expected return is lower than the optimal portfolio's potential return of 16.77%. Adjusting the asset mix to align with the Efficient Frontier could enhance performance without increasing risk. Regularly revisiting optimization strategies can ensure alignment with evolving market conditions.

Dividends Info

  • iShares Core S&P Mid-Cap ETF 1.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR S&P World ex US 1.80%
  • SPDR® Portfolio Emerging Markets ETF 1.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.04%

The portfolio yields a modest dividend of 1.04%, primarily from ETFs like the Vanguard S&P 500 ETF and SPDR S&P World ex US. While dividends provide a steady income stream, the focus remains on growth rather than income. For investors seeking higher income, increasing allocation to high-yielding assets could be beneficial. Balancing growth and income can enhance total return and provide cash flow, especially during periods of market uncertainty.

Ongoing product costs Info

  • SPDR Gold MiniShares 0.10%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR S&P World ex US 0.03%
  • SPDR® Portfolio Emerging Markets ETF 0.07%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

With a Total Expense Ratio (TER) of 0.05%, this portfolio boasts impressively low costs, supporting better long-term performance. Low fees mean more of your returns stay in your pocket, compounding over time. This aligns well with best practices for cost efficiency. However, regularly reviewing and comparing fees across similar products can ensure ongoing cost effectiveness. Consider replacing any higher-cost assets with lower-cost alternatives if available.

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