A growth-focused portfolio with significant tech exposure and moderate geographic diversification

Report created on Jan 16, 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 equities, with a notable 50% allocation to the Invesco NASDAQ 100 ETF. This concentration in a single ETF suggests a strong focus on growth, particularly within the technology sector. The remaining assets include a mix of small-cap value, S&P 500, and international stock ETFs, along with a small individual stock position in NVIDIA. Compared to a typical growth portfolio, this structure leans heavily towards tech and U.S. equities, which might limit diversification benefits.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 19.26%, indicating strong past performance. However, it also experienced a significant maximum drawdown of -29.52%, which highlights the risk associated with its growth orientation. This performance exceeds that of many broad market benchmarks, reflecting the potential rewards of a growth-focused strategy. It's important to remember that past performance doesn't guarantee future results, especially given the portfolio's concentration in high-growth sectors.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With an annualized return of 29.3% across simulations, the portfolio appears to have significant upside potential. However, the variability in outcomes, as shown by the 5th and 67th percentiles, underscores the inherent uncertainty in projections. It's crucial to note that these simulations can't predict future market conditions and should be used as a guide rather than a guarantee.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash and other asset classes. This equity-heavy composition aligns with a growth-oriented strategy but may not provide sufficient diversification to mitigate risks during market downturns. Compared to a balanced portfolio, this structure is more vulnerable to equity market volatility. To enhance risk management, consider adding other asset classes such as bonds or real estate, which can offer stability and income.

Sectors Info

  • Technology
    37%
  • Consumer Discretionary
    13%
  • Financials
    11%
  • Telecommunications
    10%
  • Industrials
    9%
  • Health Care
    5%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation is heavily skewed towards technology, which comprises over 36% of the total holdings. While this focus can drive substantial growth, it also introduces higher volatility, especially during periods of tech sector corrections. Other sectors like consumer cyclicals and financial services provide some balance, but the overall concentration remains high. To reduce sector-specific risks, consider diversifying into less represented sectors, which can offer stability and potential growth opportunities.

Regions Info

  • North America
    89%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with nearly 90% of assets allocated there. This concentration may limit exposure to growth opportunities in other regions. While developed markets like Europe and Japan are represented, emerging markets have minimal presence. To enhance geographic diversification, consider increasing exposure to international markets, which can provide growth potential and risk reduction through different economic cycles.

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 seeks the best possible risk-return ratio. This optimization focuses on adjusting existing holdings to achieve a more balanced risk profile without necessarily adding new assets. While the portfolio is already geared towards growth, exploring optimization could help fine-tune the balance between risk and return, ensuring it aligns with the investor's risk tolerance and financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.16%

The portfolio's overall dividend yield is modest at 1.16%, reflecting its growth orientation. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income. For investors seeking higher income, consider reallocating some assets to higher-yielding investments. However, it's important to balance the pursuit of yield with the portfolio's growth objectives to maintain alignment with long-term goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.15%

With a total expense ratio (TER) of 0.15%, the portfolio's costs are impressively low, supporting better long-term performance by minimizing the drag on returns. This cost efficiency aligns well with best practices in portfolio management, allowing more of the investment growth to benefit the investor. While the costs are already optimized, it's always prudent to periodically review them to ensure they remain competitive and aligned with portfolio objectives.

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