Growth-focused portfolio with strong North American bias and limited global diversification

Report created on Jan 18, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is composed primarily of ETFs, with a significant focus on U.S. equities. The Vanguard Total Stock Market Index Fund ETF holds the largest weight at 25%. This is a common strategy for growth-oriented portfolios, as it offers broad exposure to the U.S. stock market. However, the portfolio's heavy reliance on U.S. equities may limit its diversification benefits. Diversification across asset classes and regions is often recommended to reduce risk and improve stability. Consider incorporating more international equities or alternative assets to achieve a more balanced allocation.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 14.49%, indicating robust growth over time. This performance is impressive compared to many benchmarks. However, it also experienced a significant maximum drawdown of 33.01%, highlighting the potential volatility inherent in growth-focused portfolios. While past performance is not indicative of future results, understanding this volatility can help set expectations. Investors might consider strategies to mitigate drawdowns, such as diversifying into less correlated assets or incorporating defensive strategies.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median expected return of 444.43%. The simulations provide a probabilistic view of future performance, using historical data as a basis. However, it's important to note that these projections are not guarantees, as they rely on past trends that may not repeat. The analysis shows a strong likelihood of positive returns, but investors should remain aware of potential market changes. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions and personal goals.

Asset classes Info

  • Stocks
    90%
  • Other
    10%

The portfolio is heavily weighted towards stocks, comprising 89.69% of the allocation, with a small portion in gold and cash. This stock-heavy allocation aligns with a growth strategy, aiming for higher returns over time. However, such a concentration in equities can increase exposure to market volatility. Diversification across more asset classes, such as bonds or real estate, could provide a buffer during downturns. Balancing growth with stability might enhance long-term performance and reduce risk.

Sectors Info

  • Technology
    19%
  • Industrials
    19%
  • Financials
    11%
  • Health Care
    11%
  • Telecommunications
    10%
  • Consumer Discretionary
    7%
  • Utilities
    6%
  • Consumer Staples
    2%
  • Real Estate
    2%
  • Energy
    2%
  • Basic Materials
    1%

Sector allocation shows a strong emphasis on technology and industrials, with notable exposure to financial services and healthcare. This concentration in a few sectors can lead to increased volatility, especially if these sectors face challenges. While the technology sector often drives growth, it can also be sensitive to economic shifts. Diversifying into underrepresented sectors could mitigate risk and provide more stable returns. Regularly reviewing sector trends and rebalancing the portfolio can help maintain a balanced exposure.

Regions Info

  • North America
    90%

The portfolio's geographic exposure is predominantly North American, with minimal allocations to other regions. This North American bias limits global diversification, potentially missing out on growth opportunities in emerging markets. Geographic diversification can help mitigate country-specific risks and tap into diverse economic cycles. Consider increasing exposure to international equities, particularly in developed and emerging markets, to enhance diversification and capture global growth potential.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Schwab U.S. Large-Cap Growth ETF and the Vanguard Total Stock Market Index Fund ETF. High correlation means these assets tend to move in the same direction, reducing diversification benefits. To optimize risk management, consider replacing one of these holdings with an asset that exhibits lower correlation. This adjustment can enhance diversification, providing a more stable return profile during market fluctuations.

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.

Portfolio optimization indicates that a more efficient allocation could achieve an expected return of 15.93% with a similar risk level. The Efficient Frontier concept suggests that portfolios can be adjusted to improve the risk-return trade-off. By reducing highly correlated assets and exploring alternative allocations, the portfolio could potentially enhance returns without increasing risk. This approach focuses on maximizing gains for a given level of risk, aligning with the growth objectives of the portfolio.

Dividends Info

  • iShares U.S. Medical Devices ETF 0.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard Industrials Index Fund ETF Shares 0.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Communication Services Select Sector SPDR® Fund 0.70%
  • Financial Select Sector SPDR® Fund 1.40%
  • Utilities Select Sector SPDR® Fund 2.80%
  • Weighted yield (per year) 0.96%

The portfolio's overall dividend yield is 0.96%, with the highest contribution from the Utilities Select Sector SPDR® Fund at 2.8%. While dividends can provide a steady income stream, this portfolio's yield is relatively modest, reflecting its growth orientation. Dividends can be an important component for investors seeking income, especially during periods of market volatility. If income generation is a priority, consider increasing allocations to higher-yielding sectors or dividend-focused funds.

Ongoing product costs Info

  • Goldman Sachs Physical Gold ETF 0.18%
  • iShares U.S. Medical Devices ETF 0.40%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard Industrials Index Fund ETF Shares 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Communication Services Select Sector SPDR® Fund 0.09%
  • Financial Select Sector SPDR® Fund 0.09%
  • Utilities Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports better long-term performance. Lower costs mean more of the portfolio's returns are retained by the investor, enhancing compounding over time. This cost efficiency is a strong positive aspect of the portfolio. However, it's still beneficial to regularly review fees and explore opportunities to further reduce costs, ensuring the portfolio remains as efficient as possible.

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