Growth-focused portfolio with high tech concentration and low geographic diversification

Report created on Jan 19, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in equities with a 99.8% allocation, primarily through ETFs. This composition leans towards growth, with significant exposure to technology and large-cap stocks. Compared to a balanced benchmark, this portfolio lacks diversification, particularly in asset classes like bonds or international equities. Diversifying across more asset classes could help mitigate risk and smooth returns over time.

Growth Info

Historically, the portfolio has delivered strong returns with a CAGR of 16.56%, significantly outperforming many benchmarks. However, it has also experienced a max drawdown of -32.93%, indicating potential volatility. While past performance is impressive, it's essential to remember that it doesn't guarantee future results. Maintaining a balance between high returns and acceptable risk levels is crucial for sustained success.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future performance, suggests a wide range of potential outcomes. With a median projected return of 698.57%, the portfolio appears poised for growth, though there's a small chance of underperformance. Simulations are not foolproof and should be used alongside other analyses. Regularly reviewing projections can help adjust strategies in response to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is overwhelmingly in stocks, with negligible cash holdings. This single-asset focus limits diversification, potentially increasing risk during market downturns. Comparing this to a diversified benchmark, adding other asset classes like bonds or real estate could provide stability and reduce volatility. A more balanced approach can enhance the portfolio's resilience against market fluctuations.

Sectors Info

  • Technology
    51%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio is heavily weighted towards technology, comprising over half of its sector allocation. While this can drive growth, it also exposes the portfolio to sector-specific risks, such as regulatory changes or tech market downturns. Balancing sector weights could mitigate these risks. Consider diversifying into underrepresented sectors to achieve a more stable and resilient portfolio.

Regions Info

  • North America
    99%

Geographically, the portfolio is almost entirely focused on North America, with minimal exposure to other regions. This lack of geographic diversity may limit opportunities and increase vulnerability to regional economic downturns. Comparing to global benchmarks, increasing exposure to international markets could enhance diversification and capture growth in emerging economies.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly among large-cap and tech-focused ETFs. This correlation can reduce the benefits of diversification, as these assets may move in tandem during market shifts. Reducing overlap and introducing less correlated assets could improve risk management and enhance the portfolio's resilience against market 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.

The portfolio could benefit from optimization using the Efficient Frontier, which identifies the best risk-return ratio. However, current high correlations and low diversification may limit potential improvements. Before optimizing, consider adjusting asset allocations to reduce overlap and enhance diversification. This will set a stronger foundation for efficient portfolio management.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.37%

The portfolio's average dividend yield is 1.37%, with the Schwab U.S. Dividend Equity ETF contributing significantly. Dividends can provide a steady income stream and cushion against market volatility. However, given the growth focus, dividends play a secondary role. Balancing high-growth assets with dividend-paying ones could offer both income and capital appreciation.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. Lower fees mean more of your money is working for you. Maintaining this low-cost structure is beneficial, but always be on the lookout for opportunities to further reduce expenses without sacrificing quality.

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