A growth-focused portfolio with high diversification and strong historical performance

Report created on Jan 30, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of a mix of funds and individual stocks, with a significant 50% allocation to the Vanguard Target Retirement 2055 Fund. The remaining allocations include a 30% stake in Accenture plc, and smaller portions in the Vanguard S&P 500 ETF, Vanguard Total Stock Market Index Fund, and Vanguard Total World Stock Index Fund. This composition reflects a blend of active management and passive index tracking. A notable observation is the heavy reliance on a single retirement fund, which may limit flexibility but also provides a simplified investment approach. Ensuring a balance between individual stocks and diversified funds can help manage risk and capture broader market trends.

Growth Info

Historically, this portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.55%, outperforming many benchmarks. The maximum drawdown of -33.01% indicates significant volatility, but such fluctuations are common in growth-oriented portfolios. The concentration of returns in just 18 days suggests that timing plays a crucial role in capturing gains. While past performance is not indicative of future results, maintaining a long-term perspective can help navigate short-term market swings. Regularly reviewing performance against personal goals and risk tolerance is advisable to ensure alignment with investment objectives.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median (50th percentile) expected growth of 595.2%. The simulations suggest a high probability of positive returns, with 992 out of 1,000 simulations yielding gains. However, it's important to understand that these projections are based on historical data and assumptions, which may not hold true in future market conditions. Investors should use these projections as a guide rather than a guarantee, and remain adaptable to changing economic landscapes.

Asset classes Info

  • Stocks
    94%
  • Bonds
    5%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 94% allocated to equities and only 5% to bonds. This allocation aligns with a growth-oriented strategy, aiming for higher returns at the expense of increased volatility. While the high equity exposure can drive substantial gains, it also subjects the portfolio to market fluctuations. Comparing this to benchmark asset allocations, a slightly higher bond allocation could provide more stability during downturns. Investors might consider gradually incorporating more fixed-income assets to cushion against market volatility while still pursuing growth.

Sectors Info

  • Technology
    48%
  • Financials
    11%
  • Health Care
    7%
  • Industrials
    7%
  • Consumer Discretionary
    6%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%
  • Consumer Discretionary
    1%

The portfolio exhibits a strong tilt towards the technology sector, which comprises 48% of the total allocation. This concentration reflects a bet on tech-driven growth, but it also increases vulnerability to sector-specific risks, such as regulatory changes or technological disruptions. Other sectors like financial services and healthcare are represented but to a lesser extent. To mitigate potential volatility, diversifying further into non-tech sectors could provide a buffer against adverse tech market conditions. Regularly assessing sector trends can help adjust allocations in line with evolving market dynamics.

Regions Info

  • North America
    51%
  • Europe Developed
    38%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly exposed to North America (51%) and Europe Developed (38%), with minimal exposure to emerging markets. This geographic concentration aligns with developed market stability but may miss out on growth opportunities in emerging regions. Comparing to global benchmarks, increasing exposure to Asia and other emerging markets could enhance diversification and capture higher growth potential. Balancing developed and emerging market investments can help manage regional risks and leverage global economic trends.

Market capitalization Info

  • Mega-cap
    58%
  • Large-cap
    20%
  • Mid-cap
    12%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio is primarily invested in large-cap stocks, with 58% in mega-cap and 20% in big-cap companies. This focus on larger companies provides stability and lower volatility compared to small-cap stocks. However, it may also limit the potential for outsized returns often seen in smaller, more nimble companies. Introducing more mid- and small-cap stocks could enhance growth prospects and diversification. Investors should weigh the trade-offs between stability and potential returns when adjusting market cap allocations.

Redundant positions Info

  • Vanguard Total World Stock Index Fund
    VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES
    Vanguard S&P 500 ETF
    VANGUARD TARGET RETIREMENT 2055 FUND INVESTOR SHARES
    High correlation

High correlation among the portfolio's funds, such as the Vanguard Total World Stock Index Fund and Vanguard S&P 500 ETF, suggests limited diversification benefits during market downturns. While these assets provide broad market exposure, their similar movements can amplify portfolio risk. Reducing overlap by selecting funds with complementary strategies could enhance diversification. Understanding asset correlation helps manage risk and optimize the portfolio's risk-return profile, ensuring a more resilient investment strategy.

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 allocation could benefit from optimization along the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the weightings of existing assets to achieve a more efficient portfolio without necessarily adding new investments. While the current setup aligns with growth objectives, exploring opportunities to enhance risk-adjusted returns through strategic rebalancing can be beneficial. Investors should periodically review their portfolio's efficiency to ensure it remains aligned with their evolving risk tolerance and financial goals.

Dividends Info

  • Accenture plc 1.10%
  • VANGUARD TARGET RETIREMENT 2055 FUND INVESTOR SHARES 2.10%
  • Vanguard S&P 500 ETF 1.20%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 1.20%
  • Vanguard Total World Stock Index Fund 1.90%
  • Weighted yield (per year) 1.65%

The portfolio's average dividend yield is 1.65%, with contributions from Accenture plc and various Vanguard funds. Dividends provide a steady income stream, which can be reinvested to compound returns over time. For growth-focused investors, dividends may be less of a priority, but they offer a cushion during market volatility. Comparing this yield to benchmarks, it aligns with typical growth portfolios. Investors might consider balancing dividend payers with growth stocks to maintain income while pursuing capital appreciation.

Ongoing product costs Info

  • VANGUARD TARGET RETIREMENT 2055 FUND INVESTOR SHARES 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND ADMIRAL SHARES 0.04%
  • Vanguard Total World Stock Index Fund 0.10%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, reflecting the cost-efficiency of Vanguard funds. Low costs are crucial for enhancing long-term returns, as they minimize the drag on performance. This aligns well with best practices for cost management in investment portfolios. Continuously monitoring and managing costs ensures that they remain competitive and do not erode returns over time. Investors should remain vigilant about any fee changes that could impact overall performance.

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