A growth-oriented portfolio with concentrated technology exposure and moderate geographic diversification

Report created on Jan 24, 2025

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 primarily composed of U.S. equity funds and ETFs, with a significant allocation to large-cap growth and the S&P 500. It leans heavily towards technology and mid-cap momentum themes. Compared to a typical benchmark, this composition suggests a focus on growth with an emphasis on domestic markets. While this structure supports growth potential, it could benefit from increased diversification into other asset classes or regions to manage risk better.

Growth Info

Historically, the portfolio has achieved a robust CAGR of 17.79%, outperforming many standard benchmarks. However, it has also experienced a maximum drawdown of -34.24%, indicating significant volatility. This performance suggests a high potential for returns but also underscores the need to prepare for downturns. Investors should consider strategies to mitigate potential losses, such as diversifying across more stable asset classes or sectors.

Projection Info

Using Monte Carlo simulations, which predict future performance based on historical data, this portfolio shows a wide range of potential outcomes. The median projection suggests a substantial growth, but the 5th percentile warns of possible significant losses. While simulations provide valuable insights, they are not guarantees. Investors should use them as one of many tools for planning, keeping in mind that real-world results can vary.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, with no allocation to cash or bonds. This 100% equity exposure maximizes growth potential but also increases risk, especially during market downturns. A more balanced allocation, including bonds or other asset classes, could help cushion against volatility. This adjustment would align with common benchmarks that typically include a mix of asset classes to balance risk and reward.

Sectors Info

  • Technology
    39%
  • Industrials
    12%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Consumer Discretionary
    5%
  • Energy
    4%
  • Basic Materials
    2%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio is heavily weighted towards technology, comprising 39% of holdings, which can lead to higher volatility, especially in changing interest rate environments. Other sectors like industrials and financial services provide some balance, but the concentration in tech suggests a potential vulnerability to sector-specific downturns. Diversifying into less represented sectors could enhance stability and reduce risk.

Regions Info

  • North America
    88%
  • Europe Developed
    8%
  • Asia Developed
    3%
  • Japan
    1%

With 88% of assets in North America, the portfolio is heavily skewed towards the U.S. market. While this supports familiarity and potential growth, it limits exposure to international markets, which can offer diversification benefits. Increasing allocations to Europe, Asia, or emerging markets could reduce geographic risk and capture opportunities in different economic cycles, aligning more closely with global benchmarks.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    24%
  • Mid-cap
    22%
  • Small-cap
    16%

The portfolio spans across market capitalizations, with 38% in mega caps and 24% in big caps, but also includes medium and small caps. This mix provides some diversification, though the emphasis on larger companies could mean less exposure to the high growth potential of smaller firms. Balancing allocations across different market caps can enhance growth prospects while managing risk.

Redundant positions Info

  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND
    Schwab S&P 500 Index Fund
    High correlation

The portfolio has highly correlated assets, particularly between the SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND and the Schwab S&P 500 Index Fund. This correlation limits diversification benefits, as these funds tend to move in tandem. To enhance diversification, consider reducing overlap by reallocating to funds or ETFs with different investment strategies or sector focuses.

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 Efficient Frontier optimization, which seeks the best possible risk-return ratio. By adjusting allocations among existing assets, it might achieve a more balanced risk profile. However, this optimization only considers current holdings, so adding new, less correlated assets could further enhance efficiency.

Dividends Info

  • Invesco S&P MidCap 400 GARP ETF 0.70%
  • VanEck Semiconductor ETF 0.40%
  • Schwab S&P 500 Index Fund 1.20%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 0.47%

With a total yield of 0.47%, the portfolio's dividend income is modest, reflecting its growth focus. Dividends can provide a steady income stream and mitigate volatility, but this portfolio's low yield suggests a prioritization of capital appreciation over income. For investors seeking more regular income, adding higher-yielding assets could be beneficial.

Ongoing product costs Info

  • INTERNATIONAL FUND INTERNATIONAL FUND INVESTOR CLASS 0.94%
  • Invesco S&P MidCap 400 GARP ETF 0.35%
  • VanEck Semiconductor ETF 0.35%
  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND 0.04%
  • Schwab S&P 500 Index Fund 0.02%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.25%

The portfolio's total expense ratio (TER) is 0.25%, which is relatively low and supports better long-term performance by minimizing fees. The low cost of funds like the Schwab S&P 500 Index Fund is particularly beneficial. However, the INTERNATIONAL FUND INVESTOR CLASS has a higher expense ratio, which could be optimized by exploring lower-cost alternatives offering similar exposure.

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