A tech-heavy portfolio with strong US focus and moderate risk exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits investors with a moderate risk tolerance and a focus on growth, particularly those interested in technology and US equities. It's ideal for individuals with a mid- to long-term investment horizon who are comfortable with some volatility in pursuit of higher returns. While the tech-heavy focus offers growth potential, the lack of geographic and sector diversification may not appeal to those seeking a more balanced approach. Regular portfolio reviews and adjustments are crucial to align with evolving market conditions and personal goals.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.79%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    24.03%
  • SPDR S&P 500 ETF Trust
    SPY - US78462F1030
    8.99%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    8.37%
  • iShares Bitcoin Trust
    IBIT
    7.82%

The portfolio is primarily composed of ETFs, with a significant allocation to the Vanguard S&P 500 ETF at over 50%. This allocation aligns with a common benchmark for US equity exposure. However, the concentration in a few ETFs suggests limited diversification. While the Vanguard Information Technology Index Fund ETF represents a substantial portion, the presence of the iShares Bitcoin Trust adds a unique, albeit risky, element. To enhance diversification, consider including more varied asset types or sectors. This could help balance the current focus and potentially reduce risk.

Warning The historical data covers less than 2 years, which reduces the confidence in the calculated values.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 31.93%, indicating strong growth, though past performance doesn't guarantee future results. The maximum drawdown of -10.86% suggests some resilience during downturns. Compared to benchmarks, this performance is robust, likely driven by the tech-heavy focus, which has been a growth driver in recent years. To maintain this performance, it's essential to monitor sector trends and adjust allocations as needed. Consider diversifying to protect against sector-specific downturns, which could affect returns.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, show a wide range of potential returns. With a 50th percentile projection of 16,958.25% and a 5th percentile of 2,704.48%, the portfolio shows potential for high growth but also significant variability. While all simulations resulted in positive returns, it's important to remember that these are hypothetical scenarios and not guarantees. To manage risk, consider maintaining a balanced approach and regularly reviewing your portfolio to adapt to changing market conditions.

Asset classes

  • Stocks
    92%
  • Other
    8%
  • Cash
    0%

The portfolio is heavily weighted towards stocks, accounting for over 92% of assets, with minimal exposure to other asset classes. This stock-heavy allocation suggests a focus on capital growth but may increase vulnerability to market volatility. Compared to a balanced benchmark, this portfolio could benefit from diversifying into bonds or alternative investments to reduce risk. Consider introducing more fixed-income assets to achieve a more balanced risk-return profile, which could enhance stability during market fluctuations.

Sectors

  • Technology
    46%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    1%

With nearly half of the portfolio concentrated in the technology sector, there's a notable sectoral imbalance. While tech has been a strong performer, this concentration increases exposure to sector-specific risks, such as regulatory changes or market saturation. Benchmarks typically exhibit more balanced sector allocations. To mitigate potential volatility, consider diversifying into underrepresented sectors like energy or utilities. This could provide a buffer against tech sector downturns and improve overall portfolio stability.

Regions

  • North America
    92%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%
  • Asia Emerging
    0%

The portfolio's geographic allocation is overwhelmingly focused on North America, with over 91% exposure, limiting international diversification. This concentration could lead to higher risk if the US market experiences a downturn. In comparison, a global benchmark would typically have more balanced geographic exposure. To enhance diversification, consider increasing allocations to developed and emerging markets outside North America. This could help capture growth opportunities and reduce region-specific risks.

Redundant positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the S&P 500-related ETFs. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. Reducing overlap in these holdings could enhance diversification and potentially improve risk-adjusted returns. Consider replacing some of these ETFs with less correlated assets to achieve a more balanced portfolio. This approach could help mitigate risks associated with market volatility.

Dividends

  • SPDR S&P 500 ETF Trust 0.90%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Weighted yield (per year) 0.73%

The portfolio's dividend yield is 0.73%, with contributions primarily from broad market ETFs. While not a high-yield portfolio, these dividends provide a modest income stream, which can be reinvested for growth. For investors seeking higher income, consider incorporating higher-yielding assets. However, it's important to balance the desire for income with the overall growth and risk objectives of the portfolio. Evaluating the role of dividends in your investment strategy can help align with your financial goals.

Ongoing product costs

  • iShares Bitcoin Trust 0.12%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, supporting better long-term performance. Low costs mean more of your investment returns stay with you, which can significantly impact growth over time. This cost efficiency aligns well with best practices in portfolio management. While the current cost structure is advantageous, periodically reviewing and comparing costs with alternative investments can ensure continued cost-effectiveness. This practice helps maintain a competitive edge in portfolio performance.

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.

The portfolio's current allocation could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves reallocating existing assets to achieve a more balanced risk profile without necessarily adding new investments. However, optimization is limited to the assets already in the portfolio and their current market conditions. By focusing on reducing overlap and enhancing diversification, the portfolio could potentially achieve a more efficient allocation, maximizing returns for a given level of risk.

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