High-Risk Growth Portfolio with Broad Diversification and Strong Technology Focus

Report created on Nov 13, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a strong emphasis on the Vanguard S&P 500 ETF, making up 37.5% of the total. This dominance suggests a focus on large-cap U.S. stocks, providing a solid foundation. The remainder is split among various ETFs, including those targeting small-cap value and technology sectors. This composition indicates a growth-oriented strategy, aiming for capital appreciation. To improve, consider ensuring that your allocations align with your risk tolerance and investment goals, possibly by balancing large-cap and small-cap exposures.

Growth Info

Historically, the portfolio has performed exceptionally well, with a compound annual growth rate (CAGR) of 18.94%. However, it has also experienced significant volatility, with a maximum drawdown of -35.39%. This suggests that while the portfolio has the potential for high returns, it also carries substantial risk. Understanding these dynamics is crucial for setting realistic expectations. To mitigate risk, consider diversifying into less volatile asset classes, such as bonds, which can help cushion the impact of market downturns.

Projection Info

Using a Monte Carlo simulation, which involves running multiple scenarios to predict future performance, the portfolio shows promising potential. With a hypothetical initial investment, the median outcome is a 921.04% increase, showcasing strong growth prospects. However, it's important to note the variability, as the 5th percentile only yields a 100.5% return. This highlights the inherent uncertainty in investments. To navigate this, maintaining a diversified portfolio and periodically reviewing asset allocations can help manage risk and optimize returns.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, accounting for over 99% of the allocation, with negligible amounts in cash, bonds, and other asset classes. This concentration in equities suggests a high-risk, high-reward strategy. While this can lead to substantial growth, it also exposes the portfolio to significant market volatility. To enhance stability, consider incorporating a mix of asset classes, such as bonds or real estate, which can provide diversification benefits and reduce overall portfolio risk.

Sectors Info

  • Technology
    40%
  • Financials
    13%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    6%
  • Energy
    5%
  • Basic Materials
    5%
  • Telecommunications
    4%
  • Consumer Staples
    4%
  • Utilities
    2%
  • Real Estate
    2%

The technology sector dominates the portfolio, making up nearly 40% of the allocation. This heavy concentration indicates a strong belief in the growth potential of tech stocks. While this sector has historically delivered impressive returns, it also carries higher volatility. Other sectors, such as financial services and industrials, are also represented but to a lesser extent. To mitigate sector-specific risks, consider diversifying further across different industries, ensuring a more balanced sector allocation that aligns with your risk tolerance.

Regions Info

  • North America
    75%
  • Europe Developed
    13%
  • Japan
    7%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily skewed towards North America, with 74.76% of assets allocated there. While this provides exposure to the robust U.S. market, it limits diversification benefits from other regions. Europe and Japan also feature, but allocations to emerging markets are minimal. A more balanced geographic distribution can help reduce region-specific risks and capture growth opportunities globally. Consider gradually increasing exposure to underrepresented regions to enhance diversification and potentially improve risk-adjusted returns.

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 can be optimized by exploring the efficient frontier to achieve a desired risk-return profile. Moving towards a riskier portfolio involves increasing exposure to high-growth sectors, while a more conservative approach would involve adding bonds or other low-volatility assets. Before optimizing, focus on ensuring that the current asset allocation aligns with your risk tolerance and investment goals. Regularly reviewing and adjusting the portfolio can help maintain a balance between risk and return, enhancing overall performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.52%

The portfolio's dividend yield stands at 1.52%, with contributions from various ETFs. This moderate yield provides some income, although the focus remains on growth. The Avantis International Small Cap Value ETF and Vanguard FTSE Developed Markets Index Fund ETF Shares offer higher yields, enhancing income potential. While dividends are a valuable component, the portfolio's growth-oriented nature suggests that capital appreciation is the primary goal. To boost income, consider reallocating to higher-yielding assets, while ensuring alignment with overall investment objectives.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.15%

The total expense ratio (TER) of the portfolio is 0.15%, which is relatively low, indicating cost-efficient management. Lower costs can significantly impact long-term returns, as they reduce the drag on performance. The Vanguard ETFs contribute to this low cost, with expense ratios as low as 0.03%. Maintaining a focus on minimizing fees is crucial for optimizing returns. Regularly reviewing expense ratios and considering cost-effective alternatives can help ensure that investment costs remain low, maximizing the portfolio's potential growth.

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