A growth-focused portfolio with significant exposure to technology and large-cap stocks

Report created on Jan 27, 2025

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 heavily weighted towards equities, with a 100% allocation in stock ETFs. The Vanguard S&P 500 ETF comprises half of the portfolio, indicating a strong focus on U.S. large-cap equities. This composition aligns with a growth profile, but it may lack diversification compared to a benchmark portfolio that includes bonds or other asset classes. While the allocation reflects a growth-oriented strategy, it may benefit from incorporating other asset classes to reduce potential volatility and enhance diversification.

Growth Info

Historically, the portfolio has demonstrated a strong CAGR of 15.53%, outperforming many market benchmarks. However, it experienced a significant maximum drawdown of -33.30%, highlighting potential volatility. This performance suggests that while the portfolio can offer substantial returns, it is susceptible to market downturns. Investors should consider their ability to withstand such volatility, especially during market corrections, and potentially explore strategies to mitigate drawdowns.

Projection Info

The Monte Carlo simulation projects a range of potential outcomes based on historical data, with a median expected growth of 721.9%. While 997 out of 1,000 simulations show positive returns, it's important to remember that these projections are based on past performance and inherent assumptions. They provide a useful framework for understanding potential risks and returns but should not be relied upon as guaranteed outcomes. Investors should use these projections to assess alignment with their risk tolerance and investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in stocks, limiting diversification benefits typically provided by bonds or alternative assets. A more balanced allocation could potentially reduce risk and smooth returns over time. While the current allocation suits a growth-oriented strategy, incorporating other asset classes could help mitigate volatility and provide a cushion during market downturns. This approach aligns with the principle of not putting all eggs in one basket to manage risk effectively.

Sectors Info

  • Technology
    42%
  • Financials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    9%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio has a significant concentration in the technology sector, comprising 42% of its total allocation. This tech-heavy bias can lead to higher volatility, especially during periods of interest rate hikes or regulatory changes. While the technology sector offers growth potential, it may expose the portfolio to sector-specific risks. Balancing sector allocation by increasing exposure to underrepresented sectors could enhance stability and reduce vulnerability to sector-specific downturns.

Regions Info

  • North America
    95%
  • Europe Developed
    3%
  • Japan
    1%

Geographically, the portfolio is predominantly focused on North America, with 95% of assets allocated there. This concentration may limit exposure to growth opportunities in other regions, such as emerging markets. While the U.S. market has performed well historically, diversification across different geographies can help mitigate regional risks and capture growth in other parts of the world. Investors might consider increasing international exposure to enhance diversification and reduce reliance on the U.S. market.

Market capitalization Info

  • Mega-cap
    51%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio is heavily weighted towards mega and big-cap stocks, with 82% of its allocation in these categories. This focus on large-cap companies can provide stability and consistent returns, but it may limit exposure to the potentially higher growth rates of smaller companies. While large-cap stocks offer resilience during market volatility, adding small or mid-cap stocks could enhance growth potential and diversification, offering a balanced approach to capturing opportunities across different market segments.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    iShares MSCI World ETF
    High correlation

The portfolio's assets are highly correlated, particularly among the Vanguard Information Technology Index Fund ETF Shares, Vanguard S&P 500 ETF, Schwab U.S. Large-Cap Growth ETF, and iShares MSCI World ETF. High correlation means these assets tend to move together, which can limit diversification benefits, especially during market downturns. Reducing overlap by including less correlated assets could improve risk management and enhance the portfolio's resilience to 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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. However, the current high correlation among assets suggests limited diversification. Before optimizing, reducing overlapping assets that do not provide diversification benefits is essential. This approach can help achieve a more efficient allocation, maximizing returns for a given level of risk. Optimization should focus on reallocating within existing assets to enhance portfolio efficiency.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • iShares MSCI World ETF 0.70%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.88%

The portfolio's dividend yield stands at 0.88%, reflecting a modest contribution to total returns. While growth-focused portfolios often prioritize capital appreciation over income, dividends can provide a steady income stream and cushion against market volatility. Investors seeking regular income might consider incorporating higher-yielding assets to boost the overall yield, balancing growth with income generation. However, this should align with their investment goals and risk tolerance.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • iShares MSCI World ETF 0.24%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, supporting better long-term performance by minimizing costs. Low fees are crucial for maximizing returns, as they compound over time. This cost efficiency aligns well with best practices in portfolio management, ensuring more of the portfolio's growth benefits the investor. Maintaining this low-cost structure is advantageous, and investors should continue to monitor expenses to ensure they remain competitive.

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