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

Report created on Jan 22, 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 the Vanguard S&P 500 ETF, comprising 65% of the holdings, indicating a strong focus on large-cap U.S. equities. This is supplemented by a 15% allocation to the VanEck Semiconductor ETF, which adds a tech-heavy tilt, and a 10% allocation each to Avantis® U.S. Small Cap Value ETF and Vanguard Total International Stock Index Fund ETF Shares, providing some diversification into small-cap and international markets. Compared to a typical benchmark, this portfolio shows a clear preference for U.S. equities, particularly in large-cap and tech sectors, while maintaining a moderate diversification score.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 19.10%. This impressive growth rate suggests that the portfolio has capitalized on strong market trends, particularly in U.S. large-cap equities. However, it's important to note the max drawdown of -34.52%, which indicates significant volatility during market downturns. Understanding past performance helps in setting expectations, but it's crucial to remember that past performance does not guarantee future results. To mitigate potential future drawdowns, consider adding more defensive or diversified assets to the portfolio.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential portfolio values. With a 50th percentile end value of 932.4% and a 67th percentile of 1,565.5%, the projections indicate a high potential for growth. However, the 5th percentile projection of 71.1% highlights the inherent risk. While simulations provide valuable insights, they are based on historical data and assumptions, which may not fully capture future market conditions. Regularly reviewing and adjusting the portfolio can help align it with evolving market trends and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to cash or other asset classes, such as bonds or real estate. This 100% equity allocation underscores a growth-oriented strategy, which can lead to higher returns but also increases volatility. Compared to more diversified benchmarks, this lack of asset class diversification may expose the portfolio to greater market fluctuations. To enhance stability, consider incorporating other asset classes, which can provide balance and reduce overall risk, especially during periods of equity market downturns.

Sectors Info

  • Technology
    38%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

With a 38% allocation to technology, the portfolio is heavily concentrated in this sector, followed by financial services at 14% and consumer cyclicals at 10%. This concentration aligns with trends in growth sectors but may increase volatility, particularly during periods of economic uncertainty or rising interest rates. Compared to common benchmarks, this sector allocation suggests a significant tilt towards growth, which can be beneficial in bull markets. To mitigate sector-specific risks, consider diversifying into more defensive sectors, such as healthcare or utilities, which can offer stability during market downturns.

Regions Info

  • North America
    87%
  • Europe Developed
    5%
  • Asia Developed
    3%
  • Asia Emerging
    2%
  • Japan
    2%

The portfolio has a strong geographic focus on North America, with 87% of assets allocated to this region. This heavy U.S. concentration aligns with the portfolio's growth focus but may limit exposure to opportunities in other regions, such as emerging markets. Compared to global benchmarks, this geographic allocation suggests a significant home bias. To enhance diversification and potentially capture growth in other regions, consider increasing exposure to international markets, particularly in Europe and Asia, which can provide a hedge against U.S.-centric risks.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    33%
  • Mid-cap
    14%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio's market capitalization exposure is primarily in mega (42%) and big (33%) companies, with smaller allocations to medium (14%), small (6%), and micro (5%) caps. This skew towards larger companies aligns with a focus on stability and established growth. However, smaller-cap stocks often offer higher growth potential, albeit with increased risk. Compared to benchmarks, this allocation suggests a conservative approach within the growth strategy. To capture potential high-growth opportunities, consider gradually increasing exposure to small and micro-cap stocks, balancing the risk-reward ratio.

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 could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio by adjusting the weights of current assets. This involves analyzing the portfolio to find the optimal balance between risk and return, potentially enhancing performance. While the current allocation is growth-focused, exploring different weightings could uncover opportunities to improve the risk-return profile. Regularly revisiting and rebalancing the portfolio can help maintain alignment with investment goals, adapting to changing market conditions and risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.32%

The total dividend yield of the portfolio is 1.32%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.30%. Dividends can provide a steady income stream, which is particularly valuable during periods of market volatility. This yield is relatively modest for a growth-focused portfolio, indicating that capital appreciation is the primary goal. If income is a priority, consider increasing allocations to higher-yielding assets or dividend-focused funds, which can enhance the portfolio's income-generating potential while maintaining growth objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.10%, which is impressively low and supports better long-term performance by minimizing costs. The Vanguard S&P 500 ETF, with a TER of 0.03%, is particularly cost-effective, contributing significantly to the overall low cost. Keeping expenses low is crucial for maximizing net returns over time, as high fees can erode gains. This cost efficiency aligns well with best practices in portfolio management. Continue to monitor and optimize expenses where possible, ensuring that the portfolio remains aligned with cost-effective investment strategies.

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