A growth-focused portfolio with a strong technology emphasis and high North American exposure

Report created on Dec 10, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 99.68% in stocks and a small portion in cash. It primarily consists of large-cap U.S. stocks through the Vanguard S&P 500 ETF, which makes up half of the portfolio. Additionally, it includes a significant allocation to technology via the Fidelity® MSCI Information Technology Index ETF, and a smaller portion in U.S. small-cap value stocks and international equities. This composition indicates a growth-oriented strategy, aiming for capital appreciation. It's important to recognize that such a high equity concentration can lead to significant volatility, especially during market downturns. To manage risk, consider diversifying further into other asset classes such as bonds or real estate.

Growth Info

The portfolio has demonstrated impressive historical performance, with a compound annual growth rate (CAGR) of 18.09%. However, it also experienced a maximum drawdown of -35.11%, highlighting its susceptibility to market volatility. Historical performance can provide insights into how the portfolio might behave in different market conditions, but it's crucial to remember that past performance is not indicative of future results. To mitigate potential drawdowns, consider implementing a risk management strategy, such as setting stop-loss orders or incorporating more defensive assets.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, this portfolio shows promising forward projections. The median outcome suggests a 707.82% increase, while the 5th percentile indicates a 78.97% gain. These results demonstrate the portfolio's potential for substantial growth, albeit with a wide range of possible outcomes. It's essential to understand that simulations rely on historical data, which may not account for future market shifts. Regularly reviewing and adjusting the portfolio in response to changing market conditions can help in achieving desired outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is predominantly in stocks, with minimal exposure to cash and other assets. This heavy focus on equities can drive significant growth but also increases risk. Diversification across asset classes can help manage this risk by spreading investments across different types of assets, such as bonds or commodities. By incorporating a broader range of asset classes, the portfolio can potentially reduce volatility and improve risk-adjusted returns, providing a smoother investment experience over time.

Sectors Info

  • Technology
    39%
  • Financials
    14%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Health Care
    7%
  • Telecommunications
    6%
  • Energy
    5%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio has a notable concentration in the technology sector, accounting for 39.25% of the total allocation. While this sector has historically driven growth, it also introduces sector-specific risks. A well-diversified portfolio should balance exposure across various sectors to mitigate risks associated with any single industry. Consider increasing allocations in underrepresented sectors like utilities or real estate to achieve a more balanced sectoral distribution, which can help cushion the portfolio against sector-specific downturns.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

With 85.38% of the portfolio invested in North American assets, geographic diversification is somewhat limited. While this focus can capitalize on the robust U.S. market, it also exposes the portfolio to regional risks. Diversifying geographically can reduce risk by spreading investments across different economic regions. Consider increasing exposure to emerging markets or other developed economies to enhance diversification. This approach can provide access to growth opportunities in regions with different economic cycles and drivers.

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 potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the allocations among the current assets, it's possible to achieve a more efficient portfolio. This does not necessarily mean adding new assets but rather reallocating existing ones to enhance performance. Consider using portfolio optimization tools to identify the ideal allocation that maximizes returns for a given level of risk. Regular rebalancing can help maintain the optimized allocation over time.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.38%

The portfolio's dividend yield stands at 1.38%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 2.9%. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. While growth is the primary focus, incorporating higher-yielding assets could enhance income generation. Consider evaluating dividend-focused ETFs or stocks to boost the portfolio's yield. Balancing growth and income can help achieve a more comprehensive investment strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The total expense ratio (TER) of the portfolio is relatively low at 0.08%, which is advantageous for long-term investors. Lower costs mean more of the portfolio's returns are retained, compounding over time. It's essential to regularly review expense ratios and consider switching to lower-cost alternatives if available. Even small reductions in costs can lead to significant improvements in long-term returns. Ensure that any changes align with the overall investment strategy and risk tolerance.

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