A growth-focused portfolio with high tech exposure and substantial North American concentration

Report created on Jan 26, 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 heavily weighted towards equities, with 100% in stocks. It consists of three ETFs and one individual stock, with the Vanguard S&P 500 ETF making up more than half of the portfolio. This composition indicates a strong focus on large-cap U.S. equities, which are known for stability and growth potential. While this structure aligns with a growth profile, it may lack diversification benefits that could be achieved with additional asset classes like bonds or alternatives. To enhance diversification, consider introducing other asset classes that can provide balance during market fluctuations.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 19.36%, reflecting significant growth over time. However, it also experienced a maximum drawdown of -55.91%, indicating vulnerability to market downturns. This performance suggests a high-risk, high-reward profile, typical of growth-oriented portfolios. Comparing to benchmarks, such as the S&P 500, can provide context for these results. While past performance is promising, it's important to remember that it doesn't guarantee future outcomes. Regularly reviewing performance against goals can help ensure alignment with risk tolerance and investment objectives.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median expected growth of 3,163.3%. Monte Carlo simulations use historical data to model future possibilities, though they are not predictive. The portfolio shows a high likelihood of positive returns, with 999 out of 1,000 simulations yielding gains. However, the range of outcomes highlights the inherent uncertainty in investing. It's crucial to remain cautious and consider how different scenarios might impact your financial goals. Regularly revisiting these projections can help in adjusting strategies as needed.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which limits diversification across asset classes. While equities are essential for growth, the absence of bonds or alternative investments can increase volatility. Diversification across asset classes can provide stability and reduce risk, especially during market downturns. Comparing asset class weights to benchmarks can highlight diversification gaps. Introducing fixed-income assets or alternatives could enhance risk-adjusted returns by providing a buffer against stock market volatility, aligning with a balanced growth strategy.

Sectors Info

  • Technology
    39%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is heavily concentrated in technology, which comprises 39% of the allocation. This sectoral focus can lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. While tech stocks have driven significant growth, a more balanced sector allocation could mitigate risks. Comparing sector weights to benchmarks can reveal over- or under-exposures. Consider diversifying into sectors like healthcare or consumer staples to achieve a more balanced approach, reducing dependency on a single sector's performance.

Regions Info

  • North America
    91%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is concentrated in North America, with 91% exposure. This focus can limit global diversification, potentially increasing vulnerability to regional economic downturns. While North American markets have performed well, a more globally diversified portfolio could reduce regional risk. Comparing geographic allocations to global benchmarks can highlight under- or over-exposures. Introducing more international equities, particularly from emerging markets, could enhance diversification and offer exposure to different economic cycles and growth opportunities.

Market capitalization Info

  • Mega-cap
    53%
  • Large-cap
    29%
  • Mid-cap
    16%
  • Small-cap
    2%

The portfolio is predominantly invested in mega and large-cap stocks, making up 82% of the allocation. This focus on larger companies provides stability and growth potential but may limit exposure to the higher growth prospects of smaller companies. Diversification across market capitalizations can enhance growth potential and reduce risk. Comparing market cap allocations to benchmarks can highlight gaps. Introducing small or mid-cap stocks could provide additional growth opportunities and balance the risk-return profile.

Redundant positions Info

  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio exhibits high correlation among its ETFs, particularly between the Vanguard S&P 500 ETF, Vanguard Total World Stock Index Fund ETF Shares, and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move together, limiting diversification benefits. Diversification relies on having assets that perform differently under various market conditions. To enhance diversification, consider reducing overlap by introducing less correlated assets. This could help mitigate risk during market downturns and improve the portfolio's resilience.

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 seeks the best possible risk-return ratio. However, before optimizing, addressing the high correlation among assets is crucial. The Efficient Frontier is a concept that helps in finding the most efficient allocation of assets to maximize returns for a given risk level. By diversifying more effectively and reducing overlap, the portfolio could achieve a better balance between risk and return. This approach can enhance overall performance and resilience against market fluctuations.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Weighted yield (per year) 1.18%

The portfolio's dividend yield is 1.18%, with contributions primarily from the Vanguard S&P 500 ETF and Vanguard Total World Stock Index Fund ETF Shares. Dividends can provide a steady income stream, which is beneficial for reinvestment or income-focused strategies. However, the current yield is modest, aligning with a growth-focused strategy rather than income generation. For those seeking higher income, consider increasing exposure to dividend-focused funds or stocks. Balancing growth and income can help achieve a more comprehensive investment approach.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, supporting better long-term performance. Low costs mean more of your returns stay invested, compounding over time. This cost efficiency aligns with best practices in portfolio management, where minimizing expenses can significantly enhance net returns. Regularly reviewing and comparing costs to similar investments can ensure continued cost-effectiveness. Keeping an eye on expense ratios and seeking low-cost alternatives can further optimize your portfolio's performance.

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