A growth-focused portfolio with a strong emphasis on US equities and technology

Report created on Dec 29, 2024

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 weighted towards US equities, with 60% in the Vanguard S&P 500 ETF, 20% in the Avantis® U.S. Small Cap Value ETF, and 20% in the Vanguard Information Technology Index Fund ETF Shares. This structure leans towards growth, focusing on large-cap and tech stocks. Compared to a typical balanced portfolio, this one is concentrated in equities, offering potential for high returns but with increased volatility. To enhance diversification, consider incorporating other asset classes like bonds or international stocks, which can help cushion against market swings.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 18.96%, outperforming many benchmarks. However, it also experienced a significant maximum drawdown of -35.78%, indicating vulnerability during market downturns. This past performance highlights the portfolio's growth potential but also its susceptibility to volatility. While past performance doesn't guarantee future results, it's a useful indicator of risk and reward balance. Regularly reviewing historical trends can help identify potential adjustments to mitigate risk.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows promising potential. The median outcome suggests a 1,024.74% return, with most simulations yielding positive results. While these projections offer insight, remember that they rely on past data and assumptions, which may not hold in future markets. It's crucial to interpret these results as possibilities rather than certainties, and to remain flexible in adapting to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is overwhelmingly in stocks, with a negligible 0.15% in cash. This asset class concentration limits diversification, heightening exposure to equity market fluctuations. A more diversified portfolio typically includes a mix of stocks, bonds, and other assets to balance risk and return. Consider introducing fixed-income securities or alternative investments to diversify and reduce overall portfolio risk, especially during periods of market volatility.

Sectors Info

  • Technology
    41%
  • Financials
    14%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Health Care
    7%
  • Telecommunications
    6%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation is skewed towards technology, which makes up nearly 41% of the portfolio. While this can drive growth, it also increases exposure to sector-specific risks, such as regulatory changes or tech market downturns. Other sectors like financial services and consumer cyclicals are present but less dominant. To mitigate sector risk, consider broadening exposure to underrepresented areas, such as utilities or real estate, which can provide stability during tech sector volatility.

Regions Info

  • North America
    99%

The portfolio is heavily concentrated in North America, with over 99% exposure, limiting geographic diversification. This focus can lead to increased risk from regional economic downturns or policy changes. Common benchmarks often include more international exposure to balance these risks and capture global growth opportunities. Expanding into emerging markets or developed regions outside North America could enhance diversification and provide a hedge against regional economic shifts.

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's current asset allocation can be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio. By adjusting the weights of existing assets, the portfolio could achieve a more favorable balance between risk and return. While this doesn't necessarily mean adding new assets, small reallocations within the current holdings might enhance efficiency. Regularly revisiting this optimization can ensure the portfolio remains aligned with investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.16%

With a total dividend yield of 1.16%, the portfolio offers moderate income potential. Dividends can provide a steady income stream and help cushion against market volatility. For growth-focused investors, reinvesting dividends can enhance compounding returns over time. However, if income is a priority, consider increasing exposure to high-dividend stocks or dividend-focused funds to boost the portfolio's yield, balancing growth with income generation.

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%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, thanks to the cost-efficient Vanguard S&P 500 ETF. Low costs are a significant advantage, as they can enhance long-term returns by reducing the drag on performance. Continuously monitoring and minimizing expenses can maximize net returns. If any high-fee investments are considered in the future, weigh their potential benefits against their cost to maintain the portfolio's cost-effectiveness.

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