A growth-focused portfolio with a strong tilt towards technology and low-cost ETFs

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

Growth Investors

This portfolio is well-suited for an investor with a high risk tolerance seeking significant capital appreciation. It is ideal for those with a long-term investment horizon who are comfortable with market volatility and potential drawdowns. The focus on equities, particularly in technology, aligns with goals of maximizing growth rather than generating income. This investor is likely aiming to build wealth over time and is willing to accept short-term fluctuations for the prospect of higher long-term returns.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    70.00%
  • Fidelity® MSCI Information Technology Index ETF
    FTEC - US3160928087
    15.00%
  • iShares Core MSCI International Developed Market
    IDEV - US46435G3267
    15.00%

This portfolio is heavily weighted towards equities, with 70% in a broad U.S. stock market ETF and 15% each in U.S. technology and international developed markets ETFs. This composition is typical for a growth-focused portfolio, aiming for capital appreciation over time. While the high allocation to U.S. equities supports potential growth, it may not fully capture opportunities in other regions or asset classes. Consider adding more diverse asset types like bonds or real estate to balance risk and enhance stability, especially during volatile market periods.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 15%, indicating robust growth. However, it experienced a significant maximum drawdown of -34.26%, highlighting its vulnerability during market downturns. This performance is consistent with growth-focused portfolios, which typically accept higher volatility for the potential of greater returns. To potentially mitigate drawdown risk, consider incorporating more defensive assets or diversifying further across different sectors and regions, which may provide a buffer against future downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows a promising outlook with an annualized return of 16.36%. However, it's important to remember that these projections are based on past data and do not guarantee future results. The wide range of potential outcomes, from a 5th percentile return of 72.56% to a 67th percentile of 834.75%, underscores the inherent uncertainty in forecasting. To navigate this uncertainty, regularly review and adjust the portfolio to align with evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%

The portfolio is almost entirely composed of stocks, with a tiny fraction in cash and other assets. This heavy equity allocation aligns with a growth strategy, aiming for high returns. However, it also increases exposure to market volatility. Diversification across asset classes, such as including bonds or commodities, could provide stability and reduce risk. By balancing the equity exposure with fixed-income securities, the portfolio may achieve a more favorable risk-return profile, especially during economic downturns.

Sectors Info

  • Technology
    38%
  • Financials
    13%
  • Health Care
    10%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is notably concentrated in the technology sector, which comprises nearly 38% of the total allocation. While this sector has been a significant driver of growth, it also introduces higher volatility, especially if interest rates rise. The remaining sectors are more balanced, with allocations to financial services, healthcare, and industrials. To mitigate sector-specific risks, consider diversifying further into sectors like consumer staples or utilities, which tend to be more resilient during economic slowdowns.

Regions Info

  • North America
    86%
  • Europe Developed
    8%
  • Japan
    3%
  • Australasia
    1%
  • Asia Developed
    1%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with 86% exposure. This concentration can limit diversification benefits and increase vulnerability to regional economic changes. While there is some exposure to developed markets in Europe and Japan, emerging markets are significantly underrepresented. Expanding geographic diversification by increasing allocations to emerging markets could enhance growth potential and provide a hedge against regional downturns, capturing opportunities in faster-growing economies.

Dividends Info

  • Fidelity® MSCI Information Technology Index ETF 0.40%
  • iShares Core MSCI International Developed Market 1.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.24%

The portfolio's dividend yield is relatively modest at 1.24%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, they are less critical for growth-oriented portfolios. However, reinvesting dividends can be a powerful tool for compounding returns over time. If income generation becomes a priority, consider reallocating some funds to higher-yielding assets or dividend-focused ETFs to increase the portfolio's income potential.

Ongoing product costs Info

  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • iShares Core MSCI International Developed Market 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which is beneficial for long-term performance as lower costs mean more returns stay in the portfolio. This cost efficiency aligns well with a growth strategy, allowing more capital to be reinvested. To maintain this advantage, regularly review and compare the costs of your current holdings with other available options, ensuring that the portfolio continues to benefit from competitive fees.

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 can be optimized using the Efficient Frontier concept, which seeks the best risk-return ratio based on existing assets. By adjusting the weights among the ETFs, it may be possible to achieve a more efficient portfolio, potentially increasing returns without taking on additional risk. However, this optimization is limited to the current asset selection and does not necessarily imply broader diversification. Regularly revisiting these allocations can help maintain an optimal balance as market conditions change.

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