A concentrated US-focused portfolio with high growth potential but limited international diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a moderate risk tolerance and a focus on growth. It is ideal for someone who seeks to capitalize on the U.S. equity market's potential while accepting the associated volatility. With a long-term investment horizon, this investor values capital appreciation over immediate income. The current structure emphasizes large-cap stocks, offering stability and growth, but may appeal to those open to increasing diversification for risk management. This portfolio is suitable for individuals aiming to build wealth over time while remaining primarily U.S.-focused.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    77.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    9.00%
  • ProShares UltraPro QQQ
    TQQQ - US74347X8314
    5.60%
  • DRIEHAUS EMERGING MARKETS GROWTH FUND INSTITUTIONAL SHARE CLASS
    DIEMX
    2.00%
  • EA Series Trust - Alpha Architect Tail Risk ETF
    CAOS - US02072L5167
    1.50%
  • Schwab Fundamental U.S. Large Company Index ETF
    FNDX - US8085247711
    1.50%
  • Coinbase Global Inc
    COIN - US19260Q1076
    1.40%
  • PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund
    LTPZ - US72201R3049
    1.00%
  • Vanguard FTSE Europe Index Fund ETF Shares
    VGK - US9220428745
    1.00%

The portfolio is heavily weighted towards U.S. equities, with the iShares Core S&P 500 ETF making up 77% of the total. This concentration provides significant exposure to large-cap U.S. stocks, aligning with a common benchmark. However, it limits diversification benefits, especially internationally. The remaining assets are spread across a mix of ETFs, a common stock, and a fund, but these are much smaller allocations. To enhance diversification, consider adding more non-U.S. assets or different asset classes like bonds or real estate, which can help manage risk and provide more balanced growth opportunities.

Growth Info

Historically, this portfolio has performed exceptionally well, with a Compound Annual Growth Rate (CAGR) of 22.56%. This impressive growth suggests strong returns, especially given the high allocation to U.S. equities, which have generally outperformed other markets. However, the max drawdown of -13.80% highlights potential volatility. Comparing this to a benchmark like the S&P 500, which has a similar historical performance pattern, the portfolio aligns closely but may benefit from further diversification to cushion against potential downturns. Diversifying could help maintain growth while reducing downside risk.

Projection Info

The forward projection, based on a Monte Carlo simulation, offers a range of potential outcomes. This method uses historical data to simulate future performance, showing a median (50th percentile) potential return of 2,024.1%. However, it's crucial to remember that these projections are based on past data and assumptions, which may not hold true in the future. The high number of simulations with positive returns is encouraging, yet it's wise to maintain a diversified approach to mitigate unforeseen risks. Consider adjusting allocations to balance potential high returns with acceptable risk levels.

Asset classes Info

  • Stocks
    98%
  • Bonds
    1%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

This portfolio is predominantly invested in stocks, accounting for 98% of the total allocation. While this can drive growth, it also exposes the portfolio to significant market volatility. Comparatively, a more balanced benchmark might include a higher proportion of bonds or other asset classes. Introducing a greater variety of asset classes could reduce risk and improve diversification. For instance, adding more bonds or alternative investments could provide stability and income, especially during market downturns. Balancing the asset classes could enhance the risk-return profile of the portfolio.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Consumer Discretionary
    0%

The sector allocation is heavily tilted towards technology, making up 31% of the portfolio. This concentration aligns with current market trends where tech has shown strong growth but also poses higher volatility, especially during interest rate changes. Other sectors like financial services and healthcare are represented but to a lesser extent. To mitigate risk, consider diversifying into sectors less correlated with technology, such as consumer staples or utilities. A balanced sector allocation can provide a buffer against sector-specific downturns and contribute to more stable long-term growth.

Regions Info

  • North America
    94%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Latin America
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is overwhelmingly focused on North America, with 94% of the assets. This heavy U.S. concentration limits exposure to international markets, which can offer diversification benefits and potential growth opportunities. Common benchmarks typically have a more balanced geographic distribution. To enhance diversification, consider increasing allocations to developed markets in Europe or emerging markets in Asia. This can help capture growth potential in different economic cycles and reduce reliance on the U.S. market alone, potentially smoothing out returns over time.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    34%
  • Mid-cap
    17%
  • Unknown
    2%
  • Small-cap
    1%
  • Micro-cap
    0%

The portfolio's market capitalization is primarily concentrated in mega and big companies, which together account for 77% of the allocation. This focus provides stability and growth potential, as large-cap stocks often have established market positions. However, it may limit exposure to higher growth opportunities that smaller companies can offer. Introducing more mid-cap or small-cap stocks could enhance growth potential and diversification. A balanced exposure across various market capitalizations can help capture different growth dynamics and reduce concentration risk.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    iShares Core S&P 500 ETF
    High correlation

The portfolio exhibits high correlation between certain assets, notably the Vanguard Total Stock Market Index Fund ETF and the iShares Core S&P 500 ETF. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, this could amplify losses. To enhance diversification, consider replacing or reducing exposure to highly correlated assets. Introducing assets with lower correlation can help smooth returns over time and provide a more resilient portfolio during volatile periods. This adjustment could improve overall risk management.

Dividends Info

  • Schwab Fundamental U.S. Large Company Index ETF 1.70%
  • iShares Core S&P 500 ETF 1.00%
  • PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund 3.60%
  • ProShares UltraPro QQQ 1.20%
  • Vanguard FTSE Europe Index Fund ETF Shares 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Weighted yield (per year) 1.01%

The portfolio's dividend yield is modest, with a total yield of 1.01%. This reflects a focus on growth rather than income generation. While dividends can provide a steady income stream, they are less critical for growth-focused investors. However, incorporating higher-yielding assets could offer additional income and reduce reliance on capital appreciation for returns. This approach can be beneficial for those seeking a blend of income and growth. Consider balancing growth stocks with dividend-paying ones to enhance the portfolio's income potential without sacrificing growth.

Ongoing product costs Info

  • EA Series Trust - Alpha Architect Tail Risk ETF 0.63%
  • Schwab Fundamental U.S. Large Company Index ETF 0.25%
  • iShares Core S&P 500 ETF 0.03%
  • PIMCO 15+ Year U.S. TIPS Index Exchange-Traded Fund 0.20%
  • ProShares UltraPro QQQ 0.88%
  • Vanguard FTSE Europe Index Fund ETF Shares 0.13%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports better long-term performance by minimizing costs. Low costs are beneficial as they allow more of the portfolio's returns to contribute to growth. However, it's essential to monitor individual fund costs, like the ProShares UltraPro QQQ, which has a higher expense ratio of 0.88%. Consider whether the higher costs of certain funds are justified by their performance. Regularly reviewing and optimizing fund selection can help maintain low costs and maximize net 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.

The portfolio's current allocation may benefit from optimization using the Efficient Frontier concept, which seeks the best possible risk-return ratio. By adjusting the weights of existing assets, the portfolio could achieve more efficient returns without necessarily adding new investments. This involves analyzing the risk and return of each asset and reallocating to maximize returns for a given level of risk. However, optimization is based on historical data and assumptions, which may not predict future performance. Regularly reviewing allocations can ensure the portfolio remains aligned with risk-return objectives.

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