A growth-focused portfolio with high exposure to technology and low geographic diversification

Report created on Dec 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio comprises two ETFs, each representing 50% of the total allocation. This structure results in a concentrated investment approach, heavily weighted towards the U.S. stock market. Compared to common benchmarks, which often include a mix of stocks, bonds, and other assets, this portfolio lacks diversification. A more varied asset allocation could mitigate risk and provide more balanced growth by including assets like bonds or international equities.

Growth Info

Historically, the portfolio has delivered strong performance, with a Compound Annual Growth Rate (CAGR) of 15.4%. This indicates robust growth over time, outperforming many traditional benchmarks. However, the maximum drawdown of -32.35% highlights significant volatility, which could be concerning during market downturns. While past performance is encouraging, it's important to remember that it doesn't guarantee future results.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows promising potential for the portfolio. With a 50th percentile return of 597.04%, the projections suggest strong growth prospects. However, the reliance on historical data means these outcomes are not guaranteed. Considering potential market changes, it's advisable to regularly review the portfolio's risk exposure and adjust as needed.

Asset classes Info

  • Stocks
    100%
  • Cash
    1%

The portfolio is almost entirely invested in stocks, with a negligible cash position. This heavy stock allocation can drive growth but also increases risk during market downturns. Compared to balanced portfolios that blend stocks with bonds and other assets, this portfolio's lack of asset class diversification may lead to higher volatility. Diversifying into other asset classes could help stabilize returns.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    9%
  • Financials
    9%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

With 40.74% of the portfolio in the technology sector, there's a significant concentration that could lead to higher volatility, especially during interest rate fluctuations. While tech has been a strong performer, overexposure can be risky. Balancing the sector allocation by adding investments in underrepresented areas like utilities or real estate could provide more stability and reduce risk.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

The portfolio's geographic allocation is overwhelmingly in North America, accounting for 98.21% of the total. This limited international exposure may restrict potential growth opportunities and increase vulnerability to regional economic downturns. Increasing exposure to other regions, such as emerging markets or developed Europe, could enhance diversification and capture global growth trends.

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 allocation may benefit from optimization using the Efficient Frontier framework, which aims to maximize returns for a given level of risk. By adjusting the allocation between existing assets, the portfolio could achieve a more favorable risk-return balance. However, this optimization focuses solely on current assets without considering additional diversification opportunities.

Dividends Info

  • Fidelity® Nasdaq Composite Index® ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Weighted yield (per year) 0.65%

The portfolio offers a modest dividend yield of 0.65%, which is relatively low compared to income-focused investments. While dividends can provide a steady income stream, this portfolio is more growth-oriented. Investors seeking higher income may consider adding dividend-paying stocks or funds to complement the existing growth strategy.

Ongoing product costs Info

  • Fidelity® Nasdaq Composite Index® ETF 0.21%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.12%

With a total expense ratio (TER) of 0.12%, the portfolio's costs are impressively low. This efficiency supports better long-term performance by minimizing the impact of fees on returns. Maintaining low costs is crucial for maximizing net gains, so it's advisable to continue monitoring expenses and considering low-cost alternatives if needed.

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