Growth-Oriented Portfolio with Strong Tech Focus and High Historical Returns

Report created on Nov 12, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of two ETFs and two common stocks, with a significant allocation towards the Vanguard Total World Stock Index Fund ETF Shares and the Vanguard S&P 500 ETF. This indicates a strong inclination towards broad market exposure, particularly in the US. A smaller portion is allocated to individual stocks like Crowdstrike Holdings Inc and Palantir Technologies Inc, suggesting a focus on growth-oriented tech stocks. This blend offers a good mix of diversification and growth potential, but there might be a need to reassess the concentration in tech to ensure balanced risk.

Growth Info

Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 20.66%. Despite the notable maximum drawdown of -33.18%, the portfolio has delivered substantial returns over time. This suggests a high-risk, high-reward profile typical of growth-focused portfolios. However, the concentration of returns in just 22 days indicates that timing and market conditions play a significant role in its success. Monitoring market trends and being prepared for volatility is crucial for sustaining such performance.

Projection Info

Using a Monte Carlo simulation, the portfolio shows a wide range of potential future outcomes with a 5th percentile return of 91.83% and a 67th percentile return of 7,109.27%. This simulation, which runs numerous scenarios to predict future performance, suggests a positive outlook with an annualized return of 40.77%. While this is optimistic, it's important to remember that simulations rely on historical data and assumptions. Thus, maintaining a diversified approach and staying informed about market conditions will be key to achieving these potential results.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with 99.62% allocated to this asset class. This is typical for a growth-oriented portfolio aiming for high returns. However, the lack of significant allocation to other asset classes, such as bonds or real estate, may increase vulnerability to market downturns. Diversifying into other asset classes could help mitigate risk and provide more stability. Balancing growth with some conservative investments could enhance the portfolio's resilience in volatile markets.

Sectors Info

  • Technology
    43%
  • Financials
    11%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Technology dominates the sector allocation, accounting for 43.34% of the portfolio. Other sectors like Financial Services, Healthcare, and Consumer Cyclicals also have notable allocations. While a tech-heavy portfolio can yield high returns, it also exposes the investor to sector-specific risks, such as regulatory changes or technological disruptions. To reduce sector risk, consider diversifying into sectors less correlated with technology. This can provide a buffer against sector-specific downturns and contribute to more consistent performance.

Regions Info

  • North America
    85%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily skewed towards North America, with 84.53% exposure, while other regions like Europe and Asia have minimal representation. This concentration in North America aligns with the portfolio's focus on US markets but may limit exposure to growth opportunities in emerging markets. Expanding geographic diversification could enhance growth potential and reduce region-specific risks. Consider exploring opportunities in underrepresented regions to capture global market dynamics and balance geographic exposure.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio's assets show high correlation, particularly between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. This correlation may limit diversification benefits, as these assets tend to move in tandem. High correlation can increase portfolio risk, especially during market downturns. To enhance diversification, consider reducing exposure to highly correlated assets and introducing investments with lower correlation. This can help smooth returns and reduce overall portfolio volatility.

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.

Before optimizing, focus on reducing asset overlap, as highly correlated assets offer limited diversification benefits. To achieve a riskier portfolio, consider increasing allocation to individual growth stocks. For a more conservative approach, introduce bonds or other low-risk investments to balance the high stock concentration. Moving along the efficient frontier allows for adjusting the risk-return profile to better align with investment goals. This strategic adjustment can enhance portfolio efficiency and performance.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Weighted yield (per year) 1.21%

The portfolio has a modest total dividend yield of 1.21%, primarily driven by the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. While dividend income is not the main focus of a growth-oriented portfolio, it can provide a steady income stream and help cushion against market volatility. To increase dividend income, consider reallocating a portion of the portfolio to higher-yielding investments. This can enhance income stability without significantly compromising growth potential.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.04%

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