Growth-Oriented Portfolio with High U.S. Exposure and Strong Tech Focus

Report created on Jul 31, 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 composed of three ETFs: Invesco NASDAQ 100 ETF (50%), Vanguard Total Stock Market Index Fund ETF Shares (25%), and Vanguard Total International Stock Index Fund ETF Shares (25%). This setup provides broad diversification across global markets with a substantial focus on U.S. equities. The allocation leans heavily towards growth, reflecting its Profile_Growth classification. The portfolio's risk score of 5 out of 7 indicates a higher risk tolerance, suitable for investors seeking growth potential. With a diversification score of 4 out of 5, the portfolio is well-diversified, balancing risk and return expectations.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 13.75%. This impressive performance suggests that an initial investment has grown significantly over time. However, the portfolio experienced a maximum drawdown of -30.75%, highlighting its susceptibility to market volatility. The fact that 90% of returns were generated in just 16 days underscores the importance of staying invested through market fluctuations. This performance profile aligns with a growth-oriented strategy, where potential high returns come with increased risk.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, we project future outcomes for a hypothetical initial investment. This method models potential future portfolio values by simulating random market conditions. Results show a 5th percentile return of 52.99%, a median return of 408.93%, and a 67th percentile return of 598.28%. Impressively, 986 out of 1,000 simulations yielded positive returns, with an annualized return of 13.59%. This suggests a favorable long-term outlook, although individual results may vary significantly based on market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, with 99.55% of assets in equities. This heavy stock allocation aligns with the growth objective, offering potential for higher returns. The minimal cash and other asset holdings suggest limited liquidity and diversification outside equities. While this composition suits growth-focused investors, it might expose the portfolio to increased volatility. To balance risk, consider incorporating more asset classes like bonds or real estate, which can provide stability and income during market downturns.

Sectors Info

  • Technology
    36%
  • Consumer Discretionary
    12%
  • Telecommunications
    12%
  • Financials
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily weighted towards technology (36.47%), followed by consumer cyclicals, communication services, and financial services. This allocation reflects a growth-oriented strategy, capitalizing on sectors with high potential for innovation and expansion. However, it also increases exposure to sector-specific risks, such as regulatory changes or tech market fluctuations. Diversifying into more defensive sectors like utilities or consumer defensive could help mitigate sector-specific risks while maintaining growth potential.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is highly concentrated in North America (75.62%), with smaller allocations to Europe, Asia, and other regions. This strong U.S. focus capitalizes on the robust performance of U.S. markets but may limit exposure to growth opportunities in emerging markets. To enhance geographic diversification, consider increasing allocations to underrepresented regions. This can help capture growth potential in international markets and reduce reliance on any single geographic area, balancing global risks and opportunities.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio exhibits high correlation between the Invesco NASDAQ 100 ETF and the Vanguard Total Stock Market Index Fund ETF Shares. This suggests overlapping exposures, which might not provide the intended diversification benefits. High correlation means these assets often move in tandem, potentially increasing portfolio volatility. To enhance diversification, consider reducing exposure to highly correlated assets and incorporating investments with lower correlation. This approach can help smooth returns and reduce overall portfolio risk.

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 optimization chart suggests focusing on reducing overlap between highly correlated assets before optimizing further. By addressing these correlations, the portfolio can achieve better diversification and risk management. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. To increase risk, consider allocating more to equities or growth sectors. For a more conservative approach, incorporate bonds or defensive sectors. This strategic allocation can enhance portfolio efficiency and align with personal risk preferences.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.38%

The portfolio's dividend yield stands at 1.38%, with contributions from all three ETFs. The Vanguard Total International Stock Index Fund ETF Shares offers the highest yield at 3.0%, enhancing the portfolio's income potential. While the overall yield is modest, it provides a steady income stream, complementing the capital appreciation focus. To boost income, consider increasing allocations to higher-yielding assets or dividend-focused funds. Balancing growth and income can enhance long-term portfolio stability and total returns.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, reflecting low costs due to the use of ETFs. This cost-efficient structure helps maximize returns by minimizing fees. The Vanguard Total Stock Market Index Fund ETF Shares has the lowest expense ratio at 0.03%, while the Invesco NASDAQ 100 ETF has the highest at 0.15%. Maintaining low costs is crucial for long-term investment success. Regularly review and compare expense ratios to ensure the portfolio remains cost-effective, optimizing net returns over time.

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