A growth-focused portfolio with strong tech exposure and moderate international diversification

Report created on Jan 2, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards ETFs, with a focus on large-cap and tech sectors. The Invesco NASDAQ 100 ETF comprises 35% of the portfolio, indicating a strong emphasis on growth stocks. Compared to common benchmark compositions, this portfolio is more concentrated in technology and large-cap equities. This structure suggests a growth-oriented investment strategy. To enhance diversification, consider integrating more varied asset classes, such as bonds or commodities, which can provide stability during market fluctuations.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 17.05%. This is a strong performance compared to typical market benchmarks, reflecting the high growth potential of the tech and large-cap sectors. The maximum drawdown of -26.48% indicates significant volatility, which is expected in a growth-focused portfolio. While past performance is not a guarantee of future results, this historical trend suggests potential for substantial returns. However, be prepared for periods of high volatility.

Projection Info

The forward projection, using a Monte Carlo simulation, shows an annualized return of 19.12% across 1,000 simulations. This method uses historical data to simulate potential future outcomes, providing a range of possible returns. The 5th percentile return of 102.79% suggests limited downside risk, while the 67th percentile shows potential for significant gains. However, remember that these projections rely on historical data, which may not predict future market conditions accurately. Regularly reviewing and adjusting the portfolio can help mitigate risks.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with negligible allocations to cash and other asset classes. This heavy stock concentration aligns with a growth strategy but may increase volatility. Compared to benchmarks, the lack of fixed income or alternative investments could limit downside protection during market downturns. To improve diversification, consider adding non-stock asset classes, which can provide balance and reduce overall portfolio risk.

Sectors Info

  • Technology
    34%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily tech-focused, with 33.58% allocated to the technology sector. This concentration can drive growth but also increases exposure to sector-specific risks, such as regulatory changes or tech market volatility. Other sectors, like financial services and consumer cyclicals, are present but less pronounced. To mitigate sector-specific risks, consider diversifying further into sectors with lower representation, which can offer stability when tech stocks face challenges.

Regions Info

  • North America
    87%
  • Europe Developed
    5%
  • Asia Developed
    2%
  • Asia Emerging
    2%
  • Japan
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly exposed to North America, making up 87.27% of the allocation. This aligns with the client's U.S. region but limits international diversification. Exposure to regions like Europe and Asia is minimal, which could miss out on growth opportunities in emerging markets. To enhance geographic diversification, consider increasing allocations to underrepresented regions, which can provide a hedge against U.S.-specific economic risks.

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 asset allocation could potentially be optimized using the Efficient Frontier, which identifies the best risk-return ratio. This concept helps in balancing risk and return by adjusting asset weights. While the portfolio is growth-focused, exploring optimization can enhance performance and reduce risk. Regularly reassessing the allocation can ensure it remains aligned with desired risk levels and market conditions.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Value ETF 2.70%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield stands at 1.6%, with contributions from various ETFs. Dividends can provide a steady income stream, beneficial for reinvestment or income generation. However, the focus on growth-oriented ETFs results in a lower yield compared to income-focused portfolios. If income generation is a goal, consider increasing exposure to higher-yielding assets, which can enhance the overall dividend yield and provide more consistent cash flow.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Value ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the impact of fees on returns. Compared to industry averages, these costs are favorable, allowing more of the portfolio's gains to be retained. Maintaining this low-cost structure is beneficial, but it's essential to periodically review expenses to ensure they remain competitive and align with investment goals.

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