Growth-focused portfolio with high concentration in tech and large-cap stocks

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

Growth Investors

This portfolio suits an investor with a high-risk tolerance and a focus on long-term capital growth. Ideal for those comfortable with market volatility and with a time horizon that allows for recovery from downturns, it's geared towards individuals who prioritize substantial growth potential over immediate income or lower-risk investments. This profile fits investors who are less concerned with short-term fluctuations and more focused on the potential for significant returns over time.

Positions

  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND
    SWLGX - US80850L7183
    34.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    33.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    33.00%

This portfolio is heavily concentrated in U.S. large-cap growth stocks, with a significant emphasis on technology. The allocation is split almost evenly across three investment vehicles: the SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND, Invesco QQQ Trust, and Schwab U.S. Large-Cap Growth ETF. This composition suggests a strategy focused on capitalizing on the growth potential of major technology and consumer services companies in the U.S. market. However, this focus results in low diversification across sectors and geographies, with a complete absence of exposure to international markets, small to micro-cap stocks, and several key sectors.

Growth Info

The portfolio has shown impressive historic performance, with a Compound Annual Growth Rate (CAGR) of 20.31%. However, it's important to remember that past performance is not indicative of future results. The maximum drawdown of -34% highlights the portfolio's vulnerability to market volatility, especially given its concentration in growth stocks, which can be more sensitive to market swings. The days contributing to 90% of returns being limited to just 30 suggests that the portfolio's performance is highly dependent on short bursts of significant gains, which could increase risk.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows a wide range of outcomes, from a 5th percentile increase of 195.8% to a 67th percentile increase of 1,736.0%. While these projections are based on historical data and statistical models, they underscore the portfolio's potential for significant growth. However, investors should approach these projections with caution, as they do not account for unforeseen market changes and the inherent risk of high concentration in specific sectors.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is entirely invested in stocks, with no allocation to other asset classes such as bonds or real estate. This singular focus on equities, particularly in the growth segment, enhances the portfolio's growth potential but also increases its risk profile. Diversifying across different asset classes can reduce volatility and provide a buffer against stock market downturns.

Sectors Info

  • Technology
    52%
  • Telecommunications
    14%
  • Consumer Discretionary
    9%
  • Health Care
    6%
  • Financials
    5%
  • Consumer Discretionary
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Basic Materials
    1%
  • Utilities
    1%
  • Energy
    0%
  • Real Estate
    0%

With over half of the portfolio allocated to technology and significant investments in communication services and consumer cyclicals, the portfolio is positioned to benefit from the growth of major tech companies. However, this sector concentration increases the portfolio's sensitivity to changes in these industries. Diversifying across a broader range of sectors could mitigate sector-specific risks and potentially smooth out returns over time.

Regions Info

  • North America
    99%
  • Europe Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%
  • Africa/Middle East
    0%

The portfolio's geographic allocation is almost exclusively focused on North America, with no exposure to international markets. This geographic concentration limits diversification benefits and exposure to potential growth opportunities in developed and emerging markets outside the U.S. Expanding geographic exposure could reduce risk and tap into different economic growth cycles.

Market capitalization Info

  • Mega-cap
    62%
  • Large-cap
    26%
  • Mid-cap
    11%
  • Small-cap
    1%
  • Micro-cap
    0%

The heavy emphasis on mega and big-cap stocks (88% combined) aligns with the portfolio's growth and risk profile but limits exposure to the potentially higher growth opportunities found in medium, small, and micro-cap stocks. Including smaller-cap stocks could enhance diversification and provide access to a broader range of growth opportunities, albeit with increased volatility.

Redundant positions Info

  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND
    Schwab U.S. Large-Cap Growth ETF
    Invesco QQQ Trust
    High correlation

The portfolio's assets are highly correlated, as they all focus on U.S. large-cap growth stocks, particularly in the technology sector. This high correlation means that the portfolio may not benefit from diversification effects during market downturns, as these assets are likely to move in the same direction. Reducing overlap and introducing less correlated assets could enhance risk management.

Dividends Info

  • Invesco QQQ Trust 0.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND 0.40%
  • Weighted yield (per year) 0.43%

The portfolio's dividend yield is relatively low, reflecting its focus on growth stocks, which typically reinvest earnings rather than pay out dividends. While this strategy supports capital appreciation, investors seeking income in addition to growth might consider adding assets with higher dividend yields to the portfolio.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND 0.04%
  • Weighted costs total (per year) 0.09%

The portfolio benefits from low overall costs, with a total expense ratio (TER) of 0.09%. This efficient cost structure supports long-term growth by minimizing the drag on performance due to fees. Keeping costs low is crucial for maximizing returns, especially in growth-oriented portfolios where compounding plays a significant role over time.

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 composition, while successful in the past, could be optimized for better risk-adjusted returns by addressing its lack of diversification. The Efficient Frontier model suggests that diversifying across more asset classes, sectors, geographies, and market capitalizations could improve the portfolio's risk-return profile. Prioritizing this optimization could enhance long-term performance and resilience.

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