A growth-focused portfolio with significant financial services concentration and limited international exposure

Report created on Jan 13, 2025

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 composed of common stocks, with a minor allocation to an ETF. This composition is typical for a growth-focused strategy, aiming for capital appreciation. However, it lacks diversification across different asset classes like bonds or alternative investments, which can provide stability during market downturns. While this approach aligns with a high-risk tolerance, introducing more varied asset classes could help balance risk and improve resilience against market volatility.

Growth Info

Historically, the portfolio has delivered impressive returns with a CAGR of 20.12%, outperforming many benchmarks. However, it has also experienced significant drawdowns, with a maximum of -32.03%. This volatility is common in growth-oriented portfolios, which prioritize returns over stability. While past performance is not a guarantee of future results, maintaining a long-term perspective can help weather such fluctuations and capitalize on potential growth.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The 5th percentile projects a significant loss, while the 67th percentile indicates substantial gains. This highlights the high-risk, high-reward nature of the portfolio. It's important to remember that simulations are based on past data and cannot predict future market conditions with certainty. Diversifying further might help narrow the range of outcomes and reduce downside risk.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, comprising nearly 100% of the asset allocation. This concentration in a single asset class can lead to increased volatility and risk. Typically, a more balanced portfolio includes a mix of stocks, bonds, and possibly other asset classes to mitigate risk and provide more stable returns. Introducing bonds or alternative investments could help cushion the impact of market downturns and enhance long-term stability.

Sectors Info

  • Financials
    28%
  • Consumer Discretionary
    24%
  • Technology
    15%
  • Consumer Staples
    10%
  • Real Estate
    9%
  • Telecommunications
    8%
  • Energy
    3%
  • Industrials
    2%
  • Health Care
    1%

The sector allocation shows a strong concentration in financial services and consumer cyclicals, which together make up over 50% of the portfolio. This concentration can lead to increased volatility, especially if these sectors underperform. Diversifying across more sectors could reduce sector-specific risks and align the portfolio more closely with broader market benchmarks. A more balanced sector allocation can provide greater stability and growth potential.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is heavily skewed towards North America, with negligible exposure to other regions. This lack of international diversification could limit growth opportunities and increase vulnerability to regional economic downturns. Expanding geographic exposure to include more developed and emerging markets could enhance diversification and provide access to different economic growth drivers, potentially improving long-term returns.

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 could potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting allocations among existing holdings, investors can aim to achieve a more efficient balance. However, it's important to note that this optimization is based solely on current assets and may not account for other goals like diversification. Regularly reassessing allocations can help maintain an efficient portfolio.

Dividends Info

  • Ally Financial Inc 3.50%
  • Enbridge Inc 6.10%
  • Alphabet Inc Class A 0.30%
  • Intel Corporation 2.00%
  • Altria Group 7.90%
  • Realty Income Corp 5.60%
  • Starbucks Corporation 2.50%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Synchrony Financial 1.60%
  • Target Corporation 3.10%
  • U.S. Bancorp 3.10%
  • VICI Properties Inc 6.00%
  • Weighted yield (per year) 2.01%

The portfolio offers a modest total dividend yield of 2.01%, with contributions from several holdings. Dividends can provide a steady income stream, which can be reinvested to enhance compounding growth. For a growth-focused portfolio, dividends can also offer some downside protection during market volatility. Evaluating the balance between growth and income could help optimize the portfolio's risk-return profile and meet long-term investment goals.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.01%

The portfolio's costs are impressively low, with the Schwab U.S. Dividend Equity ETF having a TER of 0.06%. Low costs are crucial for maximizing long-term returns, as high fees can erode profits over time. Maintaining a focus on cost-effective investments, such as low-fee ETFs or index funds, can help enhance overall performance. Regularly reviewing and managing costs is a prudent strategy for any investor seeking to optimize their portfolio.

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