A tech-heavy growth-focused portfolio with moderate diversification and high North American exposure

Report created on Jan 12, 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 technology, with a significant 50% allocation to tech-focused ETFs. This composition aligns with a growth-oriented strategy, which typically seeks higher returns at the cost of increased volatility. Compared to a balanced portfolio, it lacks diversification across different asset classes, as it is predominantly invested in stocks. This can lead to higher risk, especially during market downturns. To enhance diversification, consider adding different asset types such as bonds or real estate, which can provide stability and reduce overall volatility.

Growth Info

Historically, the portfolio has performed impressively with a CAGR of 19.32%, indicating robust growth over time. However, it experienced a significant maximum drawdown of -34.58%, highlighting vulnerability during market corrections. Compared to benchmarks, this performance suggests strong returns but with heightened risk. While past performance is not a guarantee of future results, it provides insight into how the portfolio might react under similar conditions. Maintaining a balance between risk and return is crucial, so consider strategies to mitigate potential drawdowns, such as diversifying into less volatile sectors.

Projection Info

Using Monte Carlo simulations, the portfolio's future projections show a wide range of potential outcomes. The 50th percentile suggests a substantial growth of 691.07%, while the 5th percentile indicates a much lower return of 91.31%. This illustrates the uncertainty and variability in future returns based on historical data. While simulations provide valuable insights, they are not foolproof predictors. It's important to regularly review and adjust the portfolio to align with changing market conditions and personal financial goals, ensuring that risk exposure remains within acceptable levels.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash position. This heavy reliance on equities can lead to significant growth potential but also increases exposure to market volatility. Compared to a typical diversified portfolio, which might include bonds or alternative investments, this portfolio is more susceptible to stock market fluctuations. To enhance stability and reduce risk, consider incorporating other asset classes. Adding bonds, for example, can provide a buffer during market downturns and contribute to a more balanced risk-return profile.

Sectors Info

  • Technology
    56%
  • Financials
    13%
  • Health Care
    12%
  • Consumer Staples
    11%
  • Consumer Discretionary
    2%
  • Industrials
    2%
  • Telecommunications
    2%
  • Energy
    1%
  • Real Estate
    1%
  • Utilities
    1%

Technology dominates the portfolio with a 56% allocation, followed by financial services and healthcare. This concentration in tech can lead to higher volatility, especially if the sector faces regulatory changes or market shifts. Compared to a more evenly distributed sector allocation, this portfolio might experience significant performance swings. Diversifying across sectors can mitigate these risks. Consider increasing exposure to underrepresented sectors like industrials or utilities, which can provide stability and reduce reliance on a single industry's performance.

Regions Info

  • North America
    94%
  • Asia Developed
    4%
  • Europe Developed
    2%

The portfolio's geographic allocation is heavily skewed towards North America, comprising over 93% of the holdings. This concentration limits exposure to international markets, potentially missing out on growth opportunities abroad. Compared to global benchmarks, this lack of geographic diversification can increase vulnerability to regional economic shifts. To balance this, consider increasing exposure to emerging markets or developed regions outside North America. This can enhance diversification, providing a hedge against regional downturns and tapping into global growth potential.

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 risk-return profile has room for optimization using the Efficient Frontier, which seeks to maximize returns for a given level of risk. This involves adjusting the current asset allocation to achieve the best possible risk-return ratio. While the portfolio is growth-focused, optimizing within the existing assets can enhance efficiency. Consider rebalancing to achieve a more optimal mix, potentially increasing exposure to less volatile sectors or asset classes. This approach can improve the portfolio's resilience and align it more closely with the investor's risk tolerance and objectives.

Dividends Info

  • Johnson & Johnson 3.50%
  • Procter & Gamble Company 2.50%
  • VanEck Semiconductor ETF 0.40%
  • Visa Inc. Class A 0.70%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.17%

The portfolio's dividend yield is relatively modest at 1.17%, with contributions from Johnson & Johnson and Procter & Gamble being the most significant. For a growth-oriented portfolio, dividends may not be a primary focus, but they can provide a steady income stream and reduce reliance on capital gains. Compared to high-dividend portfolios, this yield is lower, indicating a stronger focus on capital appreciation. If income generation becomes a priority, consider reallocating some assets towards higher-yielding investments to balance growth with income.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is low at 0.13%, which is beneficial for long-term performance as it minimizes costs. This aligns with best practices in portfolio management, ensuring that more returns are retained by the investor. Compared to portfolios with higher expenses, this cost structure supports better net returns over time. Maintaining low costs is crucial, so continue to evaluate whether the current asset choices remain the most cost-effective. Consider alternatives like lower-cost ETFs or funds to further optimize expenses without sacrificing performance.

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