Growth-Oriented Portfolio with High Technology Exposure and Moderate Diversification for Risk-Tolerant Investors

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 suits investors with a high risk tolerance who aim for significant capital appreciation. These investors are comfortable with market volatility and can withstand potential drawdowns in pursuit of long-term growth. They likely have a longer investment horizon, allowing them to ride out market fluctuations. Their primary goal is to maximize returns rather than generate income, making them less reliant on dividends. This investor type is proactive in managing risk and seeks to optimize their portfolio through diversification and strategic asset allocation.

Positions

  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    60.00%
  • Technology Select Sector SPDR® Fund
    XLK - US81369Y8030
    30.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    10.00%

The portfolio is heavily weighted in equities, with a strong focus on U.S. large-cap growth stocks and technology sectors. It consists of three ETFs, with the Schwab U.S. Large-Cap Growth ETF making up 60% of the portfolio, followed by the Technology Select Sector SPDR® Fund at 30%, and a smaller allocation to the Vanguard Total International Stock Index Fund ETF Shares at 10%. This composition suggests a growth-oriented strategy, with a high concentration in technology stocks, which could lead to higher volatility but potential for significant returns.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 17.57%. This indicates strong growth over time, but it also comes with substantial risk, as evidenced by a maximum drawdown of -33.62%. The portfolio's returns are concentrated, with just 38 days accounting for 90% of its gains. This highlights the importance of timing and market conditions in achieving these returns. It's crucial to be prepared for potential downturns, despite the attractive historical performance.

Projection Info

Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio shows a wide range of possible results. With a hypothetical initial investment, the 5th percentile outcome is a 74.37% return, while the median is 525.57%, and the 67th percentile reaches 791.72%. The high number of simulations with positive returns (989 out of 1,000) suggests a strong likelihood of future growth, but the variability in outcomes indicates the need for a solid risk management strategy to navigate potential fluctuations.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is almost entirely invested in stocks, with 99.79% of assets in this class, while cash and other categories make up a tiny fraction. This heavy equity allocation aligns with a growth-focused investment strategy, aiming for capital appreciation rather than income generation. While this can lead to higher returns, it also exposes the portfolio to market volatility. To manage risk, consider diversifying into other asset classes like bonds or real estate, which can provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    60%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Health Care
    7%
  • Financials
    6%
  • Industrials
    4%
  • Consumer Staples
    2%
  • Basic Materials
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is heavily skewed towards technology, which comprises over 60% of the portfolio. Other sectors like consumer cyclicals, communication services, and healthcare have smaller allocations. This concentration in technology can drive strong returns during growth periods but also increases vulnerability to sector-specific downturns. To mitigate risks, consider diversifying across more sectors, which can help balance the portfolio and protect against potential losses in any single industry, enhancing long-term stability and performance.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, with 90.41% of assets in this region. Smaller allocations are present in Europe, Asia, and other regions. This concentration in North American markets can be beneficial during periods of strong U.S. economic growth but may limit exposure to global opportunities. To enhance diversification and reduce regional risk, consider increasing allocations to international markets, which can provide exposure to different economic cycles and growth opportunities outside the U.S.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Technology Select Sector SPDR® Fund
    High correlation

The portfolio shows high correlation between the Schwab U.S. Large-Cap Growth ETF and the Technology Select Sector SPDR® Fund. This indicates that these assets tend to move in the same direction, which can amplify portfolio volatility during market swings. While this correlation can boost returns in a rising market, it also increases risk. To improve diversification, consider reducing exposure to highly correlated assets and introducing investments with lower correlation, which can help stabilize the portfolio during turbulent market conditions.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Technology Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 0.75%

The portfolio's dividend yield stands at 0.75%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the most at 3.0%. This yield is relatively low, reflecting the portfolio's focus on growth rather than income generation. While dividends can provide a steady income stream and cushion against market volatility, the current yield may not be sufficient for income-focused investors. To enhance income potential, consider adding higher-yielding assets, which can provide regular cash flow and complement capital appreciation.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, which is quite competitive and indicates a cost-efficient investment strategy. Low costs can significantly impact long-term returns, as they reduce the drag on performance. Each ETF in the portfolio has a relatively low expense ratio, contributing to the overall cost-effectiveness. Maintaining low costs is crucial for optimizing returns, so continue to monitor and manage expenses. Consider exploring other low-cost investment options to ensure the portfolio remains efficient and maximizes 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.

Before diving into optimization, focus on reducing overlapping assets that don't enhance diversification. By moving along the efficient frontier, you can adjust your portfolio to be riskier or more conservative. If you want a riskier portfolio, lean towards high-growth assets. For a more conservative approach, increase exposure to stable, income-generating assets like bonds. Optimizing the portfolio involves balancing risk and return, ensuring alignment with your financial goals and risk tolerance. Once overlaps are addressed, explore further diversification to enhance stability.

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