A growth-focused portfolio with heavy tech exposure and high historical returns

Report created on Jun 14, 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 primarily composed of three ETFs: VanEck Semiconductor ETF, Invesco NASDAQ 100 ETF, and Vanguard Total Stock Market Index Fund ETF, each holding roughly a third of the total weight. This composition leans heavily towards equities, with a negligible cash holding. Compared to a typical balanced portfolio, this setup is more aggressive, indicative of a growth-focused strategy. By concentrating on ETFs, the portfolio benefits from diversification within each fund, but the overall allocation is highly skewed towards technology stocks.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 20.58%. However, it also experienced a significant maximum drawdown of -36.03%, reflecting the inherent volatility of a growth-focused strategy. This performance outpaces many benchmarks, indicating strong returns but also emphasizing the importance of risk management. It's crucial to remember that past performance isn't a guarantee of future results, and this high return comes with increased risk.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median expected return of 1,086.49% and an annualized return of 22.88%. Monte Carlo simulations use historical data to model numerous potential future scenarios, providing a probabilistic view of outcomes. While these projections are optimistic, they rely on past market conditions, which may not predict future performance accurately. Investors should remain cautious and prepared for variability.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in equities, with 99.91% of assets in stocks and a minimal cash allocation. This single asset class focus can lead to higher returns during bull markets but also exposes the portfolio to increased volatility. Compared to a diversified portfolio that includes bonds or alternative assets, this setup may lack stability during market downturns. Consider incorporating other asset classes to balance risk and enhance diversification.

Sectors Info

  • Technology
    61%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Health Care
    6%
  • Financials
    5%
  • Industrials
    4%
  • Consumer Staples
    4%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio is notably technology-heavy, with 60.93% allocation in this sector, followed by smaller allocations in consumer cyclicals and communication services. This concentration can lead to higher volatility, especially during periods of tech sector instability or regulatory changes. While tech stocks have driven recent gains, diversifying into underrepresented sectors like utilities or real estate could reduce risk and provide more balanced exposure to different economic cycles.

Regions Info

  • North America
    92%
  • Asia Developed
    5%
  • Europe Developed
    3%

Geographically, the portfolio is predominantly focused on North American markets, with 92.20% of assets allocated there. This concentration offers familiarity and potential stability but limits exposure to international growth opportunities. The minimal allocation to Asia and Europe suggests a missed chance for diversification benefits. Expanding geographic exposure could mitigate regional risks and tap into emerging markets' growth potential.

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 potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. While the current allocation is heavily weighted towards growth, adjusting the mix of assets could enhance efficiency by balancing risk and return more effectively. This involves reallocating within the existing asset classes to achieve a more optimal balance without necessarily diversifying into new areas.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 0.63%

The portfolio's dividend yield is relatively low at 0.63%, reflecting its growth-oriented strategy. While dividends can provide steady income and cushion against volatility, the current focus is on capital appreciation rather than income generation. Investors seeking income may want to consider adding higher-yielding assets to balance the growth focus with regular income streams.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.18%

The total expense ratio (TER) of the portfolio is 0.18%, which is commendably low. This cost efficiency supports better long-term performance by minimizing fees that can erode returns. Keeping costs low is a positive alignment with best practices, ensuring that more of your investment gains remain in your pocket. Regularly reviewing and maintaining low-cost investments is crucial for optimizing returns.

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