Growth-focused portfolio with significant technology exposure and strong historical performance
Report created on Dec 6, 2024Risk profile
5/7
Diversification profile
4/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 50.00% -
VG Vanguard Information Technology Index Fund ETF Shares
VGT - US92204A7028 30.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00%
The portfolio is heavily weighted towards equities, with 50% in the Vanguard S&P 500 ETF, 30% in the Vanguard Information Technology Index Fund ETF, and 20% in the Vanguard Total International Stock Index Fund ETF. This composition reflects a strong focus on growth, particularly within the US market, and a notable emphasis on the technology sector. Such a structure can offer substantial growth potential but also comes with higher volatility. To balance risk, consider diversifying further by including bonds or other asset classes.
Growth
Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 15.04%, despite a maximum drawdown of -33.05%. This indicates that while the portfolio has experienced significant growth, it has also been susceptible to considerable downturns. Understanding past performance is crucial, but remember that it does not guarantee future results. To mitigate potential drawdowns, consider incorporating defensive assets that could provide stability during market volatility.
Projection
Monte Carlo simulations, which use historical data to predict future outcomes, suggest a range of potential future returns. With 1,000 simulations, the portfolio shows a 5th percentile return of 64.51% and a 50th percentile return of 515.54%. While these projections indicate strong growth potential, they are based on past data and assumptions that may not hold in the future. It's important to regularly review and adjust the portfolio to align with changing market conditions and personal goals.
Asset classes
- Stocks 100%
The portfolio is almost entirely composed of stocks, with 99.54% in equities and a minor allocation to cash and other assets. This heavy equity allocation supports a growth-oriented strategy but also increases exposure to market volatility. Diversification across asset classes can reduce risk and enhance stability. Consider adding fixed income or alternative investments to balance the portfolio and provide a buffer during equity market downturns.
Sectors
- Technology 49%
- Financials 11%
- Health Care 7%
- Consumer Discretionary 7%
- Industrials 7%
- Telecommunications 6%
- Consumer Staples 4%
- Energy 3%
- Basic Materials 2%
- Utilities 2%
- Real Estate 2%
The portfolio has a significant concentration in the technology sector, accounting for nearly 49% of the total allocation. While technology has driven impressive returns, overexposure to one sector can increase risk if that sector underperforms. To reduce sector-specific risk, consider reallocating some funds to other sectors like healthcare or consumer staples, which may offer more stability and diversification benefits.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Africa/Middle East 1%
With 81% of the portfolio's geographic exposure in North America, there's a strong reliance on the US market. While this has historically been a robust market, geographic diversification can help mitigate risks associated with regional economic downturns. Increasing exposure to emerging markets or underrepresented regions like Latin America or Africa could enhance diversification and provide access to different growth opportunities.
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.
By applying the Efficient Frontier concept, the portfolio could potentially achieve a better risk-return balance. This involves reallocating existing assets to optimize the portfolio's efficiency, maximizing returns for a given level of risk. However, optimization does not guarantee improved performance and should be approached with caution. Regularly reassess the portfolio and consider consulting with a financial advisor to ensure alignment with your risk tolerance and investment goals.
Dividends
- Vanguard Information Technology Index Fund ETF Shares 0.60%
- Vanguard S&P 500 ETF 1.20%
- Vanguard Total International Stock Index Fund ETF Shares 2.90%
- Weighted yield (per year) 1.36%
The portfolio's dividend yield stands at 1.36%, with the Vanguard Total International Stock Index Fund offering the highest yield at 2.9%. While dividends contribute to total returns, the focus on growth means dividends are a smaller component. For those seeking income, consider increasing allocations to higher-yielding assets or dividend-focused funds, which can provide a steady income stream and enhance total returns.
Ongoing product costs
- 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) 0.06%
The portfolio's total expense ratio (TER) is 0.06%, which is relatively low and beneficial for long-term growth. Lower costs mean more of your returns are retained over time. However, always be on the lookout for opportunities to reduce costs further. Consider evaluating other low-cost ETFs or funds that align with your investment strategy, as even small reductions in fees can significantly impact long-term returns.
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