A growth-oriented portfolio with diverse sector exposure and moderate geographic concentration

Report created on Feb 17, 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 structured with a strong focus on growth, comprising primarily ETFs with a small allocation to a mutual fund. The largest holding is the iShares S&P 100 ETF at 22.66%, followed by a mix of mid-cap, large-cap, and international funds. This composition leans heavily toward equities, with no allocation to bonds or cash. While the growth focus is clear, the lack of fixed income or cash may limit stability during market downturns. Consider introducing some fixed income assets to balance risk and enhance diversification, especially if market volatility increases.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 16.27%, reflecting strong growth potential. However, it has also experienced a significant maximum drawdown of -33.65%, indicating vulnerability during market declines. This performance aligns well with its growth focus but underscores the importance of risk management. Comparing this to a benchmark like the S&P 500 can provide further context. To mitigate potential drawdowns, consider incorporating assets with lower volatility or diversifying across additional asset classes.

Projection Info

The Monte Carlo simulation, a method using historical data to project future outcomes, suggests a wide range of potential returns. With a median projection of 551.8% and a high number of simulations showing positive returns, the outlook is optimistic. However, it's crucial to remember that these projections are based on past data and do not guarantee future results. Regularly reviewing and adjusting the portfolio based on changing market conditions can help maintain alignment with your financial goals.

Asset classes Info

  • Stocks
    100%

This portfolio is exclusively invested in stocks, which aligns with its growth-oriented strategy. While this can drive higher returns, it also increases exposure to market volatility. Compared to a more balanced benchmark, this allocation lacks the stability that bonds or other asset classes might provide. To enhance diversification and potentially reduce risk, consider incorporating a small percentage of fixed income or alternative investments, which can offer a buffer during market fluctuations.

Sectors Info

  • Technology
    26%
  • Financials
    13%
  • Industrials
    11%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Consumer Discretionary
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily weighted towards technology at 26%, followed by financial services and industrials. This concentration in tech can lead to higher volatility, especially during economic shifts or interest rate changes. The sector diversification is fairly broad, covering 11 sectors, which helps mitigate sector-specific risks. Aligning sector weights more closely with a diversified index could offer a more balanced risk-return profile. Consider adjusting sector allocations to manage exposure to cyclical trends effectively.

Regions Info

  • North America
    80%
  • Europe Developed
    14%
  • Japan
    3%
  • Australasia
    1%
  • Asia Developed
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is predominantly focused on North America, with 80% exposure, followed by Europe Developed at 14%. This concentration may limit the benefits of international diversification, which can help manage geopolitical and economic risks. Compared to global benchmarks, the portfolio lacks significant exposure to emerging markets. To enhance geographic diversification, consider increasing allocations to regions like Asia or Latin America, which may offer growth opportunities and risk mitigation against regional downturns.

Market capitalization Info

  • Mega-cap
    37%
  • Mid-cap
    30%
  • Large-cap
    25%
  • Small-cap
    5%
  • Micro-cap
    3%

The portfolio's allocation by market capitalization is skewed towards mega-cap stocks at 37%, with medium and big caps also holding substantial weights. This distribution provides a balance between stability and growth potential. However, the relatively low allocation to small and micro-caps may limit exposure to potentially higher growth opportunities. Consider increasing the allocation to small-cap stocks, which can offer diversification benefits and enhance overall growth potential, albeit with increased volatility.

Redundant positions Info

  • iShares S&P 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio includes highly correlated assets, such as the iShares S&P 100 ETF and the Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this can amplify losses. To enhance diversification, consider replacing one of these assets with an uncorrelated asset, which can help balance risk and improve the portfolio's resilience against market swings.

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's current structure may benefit from optimization using the Efficient Frontier concept, which seeks the best risk-return ratio. By adjusting allocations among existing assets, the portfolio can potentially achieve a more favorable balance between risk and return. This process focuses on maximizing returns for a given level of risk, not necessarily achieving perfect diversification. Consider consulting with a financial advisor to explore optimization strategies that align with your risk tolerance and investment goals.

Dividends Info

  • Avantis® International Small Cap Value ETF 4.10%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • WisdomTree International Hedged Quality Dividend Growth Fund 1.40%
  • iShares Morningstar Mid-Cap Growth ETF 0.50%
  • iShares Morningstar Mid-Cap Value ETF 1.60%
  • Vanguard Mega Cap Value Index Fund ETF Shares 2.20%
  • iShares S&P 100 ETF 1.00%
  • PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND CLASS Z 0.10%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Weighted yield (per year) 1.10%

The portfolio's total dividend yield is 1.10%, with the highest yield from the Avantis® International Small Cap Value ETF at 4.10%. While dividends contribute to overall returns, the portfolio's growth focus means dividends are not a primary driver. For investors seeking income, a higher dividend yield might be desirable. Consider whether the current yield aligns with your income needs, and if not, explore adding higher-yielding assets to balance growth with income generation.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • WisdomTree International Hedged Quality Dividend Growth Fund 0.58%
  • iShares Morningstar Mid-Cap Growth ETF 0.06%
  • iShares Morningstar Mid-Cap Value ETF 0.06%
  • Vanguard Mega Cap Value Index Fund ETF Shares 0.07%
  • iShares S&P 100 ETF 0.20%
  • PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND CLASS Z 0.90%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.23%

The portfolio's total expense ratio (TER) is 0.23%, which is relatively low and supports better long-term returns by minimizing costs. The highest cost comes from the PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND CLASS Z at 0.90%. Keeping costs low is crucial for maximizing net returns. Regularly reviewing and optimizing the cost structure can help maintain efficiency. Consider replacing higher-cost funds with more cost-effective alternatives, ensuring they align with your investment strategy.

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