Growth-Oriented Portfolio with Moderate Diversification and High Technology Exposure

Report created on Jul 5, 2024

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 composed of four ETFs, with a heavy emphasis on the Vanguard S&P 500 ETF, which makes up 50% of the portfolio. This is followed by the Vanguard Information Technology Index Fund ETF Shares at 25%, the Avantis U.S. Small Cap Value ETF at 15%, and the Vanguard Total International Stock Index Fund ETF Shares at 10%. This setup suggests a growth-focused strategy with a significant tilt towards large-cap U.S. equities, particularly in the technology sector. This composition is relevant for investors looking for capital appreciation through exposure to major U.S. indices and specific growth sectors.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 18.76%. However, it experienced a maximum drawdown of -35.01%, indicating significant volatility. The returns are concentrated, with just 19 days accounting for 90% of the gains. This performance reflects the portfolio's growth potential but also its susceptibility to market swings. Investors should be aware of the potential for both high returns and significant losses, and align their expectations accordingly.

Projection Info

Using a Monte Carlo simulation with 1,000 trials, the portfolio shows promising forward projections. Assuming a hypothetical initial investment, the median outcome suggests a 694.09% increase, with a 5th percentile outcome of 76.97% and a 67th percentile outcome of 1,091.15%. With 986 simulations yielding positive returns, the annualized return across all simulations is 19.1%. This forward-looking analysis highlights the portfolio's potential for growth, albeit with inherent risks. Investors should consider these projections when planning for long-term financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.69% allocated to equities. This high equity exposure aligns with a growth-oriented strategy, suitable for those seeking capital appreciation. The minimal allocation to cash and other assets suggests a focus on maximizing returns through stock investments. While this can lead to higher potential gains, it also increases exposure to market volatility. Investors should evaluate their risk tolerance and consider diversifying into other asset classes if they seek to mitigate risk.

Sectors Info

  • Technology
    44%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Energy
    4%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation reveals a strong emphasis on technology, which constitutes 43.57% of the portfolio. Other significant sectors include financial services, consumer cyclicals, and industrials. This concentration in technology suggests a bet on the continued growth and innovation within this sector. While this can drive strong returns, it also introduces sector-specific risks. Investors should be mindful of the potential for sector volatility and consider diversifying across a broader range of industries to reduce risk.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America, which accounts for 89.93% of the allocation. This focus on North American markets reflects a confidence in the region's economic prospects, particularly in the U.S. While this can lead to strong performance during periods of U.S. economic growth, it also exposes the portfolio to regional risks. Investors seeking broader diversification might consider increasing exposure to international markets, which currently represent a small portion of the portfolio.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio features highly correlated assets, particularly between the Vanguard Information Technology Index Fund ETF Shares and the Vanguard S&P 500 ETF. This correlation indicates that these assets tend to move in the same direction, which can amplify both gains and losses. While this can be beneficial in rising markets, it also increases risk during downturns. Investors should be aware of this correlation and consider diversifying into less correlated assets to reduce overall portfolio volatility.

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.

Given the overlapping assets and high correlation within the portfolio, optimization may not be the primary focus currently. Instead, investors should consider diversifying into less correlated assets to reduce risk. The portfolio's position on the efficient frontier can be adjusted by increasing exposure to bonds for a more conservative approach or further diversifying within equities for a riskier stance. Investors should evaluate their risk tolerance and financial goals to determine the most suitable portfolio adjustments, keeping in mind the potential trade-offs between risk and return.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.28%

The portfolio's dividend yield stands at 1.28%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. The Avantis U.S. Small Cap Value ETF also provides a reasonable yield of 1.5%. While dividends are not the primary focus of this growth-oriented portfolio, they do provide some level of income. Investors looking for higher income might consider reallocating towards higher-yielding assets or increasing their exposure to dividend-focused investments.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is a low 0.09%, which is advantageous for investors seeking to minimize costs. The Vanguard S&P 500 ETF has the lowest expense ratio at 0.03%, while the Avantis U.S. Small Cap Value ETF is the highest at 0.25%. Keeping costs low is crucial for maximizing net returns over time. Investors should continue to monitor expense ratios and consider low-cost options when making adjustments to the portfolio, ensuring that costs do not erode potential gains.

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