Growth-focused portfolio with heavy tech orientation and low diversification

Report created on Aug 1, 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 comprised entirely of equity-based assets, evenly split among three major funds: the Fidelity 500 Index Fund, Invesco NASDAQ 100 ETF, and Vanguard Total Stock Market Index Fund ETF Shares. This structure indicates a strong focus on the US stock market, with a significant weighting towards large-cap stocks. The equal distribution among these funds suggests an attempt at diversification within the equity market, though it's concentrated in similar asset classes and sectors, leading to low overall diversification.

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 15.64%, with a maximum drawdown of -28.20%. These figures indicate a high-growth potential but come with significant volatility, as evidenced by the steep drawdown. The days contributing most to returns are relatively few, highlighting the impact of short-term gains on overall performance. This performance, while impressive, should be evaluated in the context of its risk profile.

Projection Info

Monte Carlo simulations, running 1,000 scenarios, project a wide range of outcomes, with a median increase of 648.6%. Such projections are based on historical data and are useful for understanding potential volatility and risk. However, it's crucial to remember that these simulations cannot predict future market conditions with certainty. The high percentage of simulations with positive returns underlines the portfolio's growth potential, albeit with risk.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is 100% in stocks, showcasing a clear growth orientation but lacking in asset class diversification. This concentration in one asset class amplifies both the potential for high returns and the risk of significant losses, especially during market downturns. Diversifying across different asset classes could reduce volatility and provide a smoother return profile over time.

Sectors Info

  • Technology
    38%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Consumer Discretionary
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

With 38% in technology and notable allocations to communication services and financial services, the portfolio is heavily skewed towards sectors that can exhibit high volatility. While tech stocks have driven substantial returns in recent years, this concentration increases the portfolio's sensitivity to sector-specific risks. Balancing sector exposure can mitigate the impact of any single sector's downturn.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The geographic allocation is overwhelmingly North American (99%), with a minimal exposure to developed Europe (1%). This concentration in the US market limits global diversification and exposure to potential growth in other regions. Incorporating more geographic diversity could reduce risk and tap into different economic growth cycles.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    33%
  • Mid-cap
    16%
  • Small-cap
    2%
  • Micro-cap
    1%

The focus on mega (48%) and big (33%) cap stocks provides stability and access to established companies but limits exposure to the potentially higher growth of medium, small, and micro-cap stocks. Diversifying across different market capitalizations could enhance returns over time, albeit with increased risk.

Redundant positions Info

  • Fidelity 500 Index Fund
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The high correlation between the Fidelity 500 Index Fund and Vanguard Total Stock Market Index Fund ETF Shares indicates overlapping investments, which diminishes the benefits of diversification. Identifying and reducing such overlap can improve the portfolio's risk-adjusted returns by ensuring that each asset contributes uniquely to the portfolio's performance.

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 structure, with highly correlated assets, suggests room for optimization. Focusing on diversifying across different asset classes, sectors, and geographies could improve the risk-return profile. The Efficient Frontier concept could guide reallocation to achieve a more efficient portfolio, balancing risk and return more effectively.

Dividends Info

  • Fidelity 500 Index Fund 0.90%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.87%

The portfolio's dividend yield averages to 0.87%, contributing to total returns. While not the primary focus for a growth-oriented portfolio, dividends offer a source of income and can provide a cushion during market downturns. Considering the growth focus, the current yield is reasonable, but investors seeking income might look for higher-yielding options.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.07%

The total expense ratio (TER) of 0.07% is impressively low, maximizing the potential for net returns. Keeping costs low is crucial for long-term investment success, especially in a growth-oriented portfolio where compounding plays a significant role. This aspect of the portfolio is well-optimized.

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