A growth-oriented portfolio with strong U.S. focus and tech sector exposure

Report created on Jan 28, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio predominantly consists of stocks, with a notable 70% allocation to the Vanguard Total Stock Market Index Fund ETF. The iShares Core MSCI International Developed Market ETF makes up 25%, and the Fidelity® MSCI Information Technology Index ETF accounts for 5%. This composition leans heavily towards U.S. equities, with a moderate international presence. The allocation reflects a growth-focused strategy. A broader diversification across asset classes could reduce risk, as it currently lacks exposure to bonds or alternative investments, which could provide stability during market downturns.

Growth Info

The portfolio has delivered a strong historic CAGR of 13.78%, indicating robust growth over time. However, it faced a significant max drawdown of -34.51%, highlighting vulnerability to market volatility. This performance suggests that while the portfolio has been lucrative, it carries inherent risks typical of growth strategies. Comparing this to a benchmark, such as a balanced index, could provide context on risk-adjusted returns. To mitigate drawdowns, consider integrating more defensive assets that could cushion against sharp market declines.

Projection Info

Monte Carlo simulations, which use historical data to predict future performance, suggest an optimistic outlook with a median projected growth of 559.2%. However, these projections are based on past trends and do not guarantee future results. The simulations show a high probability of positive returns, but it's important to remember that unexpected market changes can affect outcomes. Regularly reviewing and adjusting the portfolio based on market conditions and personal financial goals can help maintain alignment with long-term objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking diversification across different asset classes. This singular focus can lead to higher volatility, as stocks are generally more susceptible to market swings compared to bonds or real estate. Diversifying into other asset classes could potentially stabilize returns and reduce overall risk. Including even a small percentage of bonds or alternative investments might provide a buffer during equity market downturns, enhancing the portfolio's resilience.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

With 30% of the portfolio in technology, there's a significant sector concentration. This allocation could lead to higher volatility, especially during periods of tech market corrections. While the tech sector has been a strong performer, it's important to balance exposure to mitigate risks associated with sector-specific downturns. Diversifying into sectors like healthcare or consumer staples could provide more stability and reduce reliance on the tech industry's performance.

Regions Info

  • North America
    78%
  • Europe Developed
    14%
  • Japan
    5%
  • Australasia
    2%
  • Asia Developed
    1%

The portfolio is heavily skewed towards North America, which makes up 78% of the geographic allocation. While this reflects the strong performance of U.S. markets, it may expose the portfolio to region-specific risks. Increasing exposure to emerging markets or other developed regions could enhance diversification and reduce potential volatility from U.S.-centric events. A more balanced geographic allocation can also capture growth opportunities in underrepresented markets.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is well-balanced, with a strong focus on mega and big-cap stocks, which together comprise 73%. This provides stability, as larger companies tend to be more resilient during economic downturns. However, the presence of medium, small, and micro-cap stocks adds growth potential. It's wise to maintain this balance, ensuring that the portfolio captures the stability of large caps while benefiting from the growth prospects of smaller companies.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio given the current assets. This approach involves adjusting the allocation among existing holdings to achieve maximum efficiency. While this doesn't necessarily increase diversification, it can enhance returns for a given level of risk. Regularly revisiting the allocation based on changing market conditions and personal goals can help maintain optimal performance.

Dividends Info

  • Fidelity® MSCI Information Technology Index ETF 0.40%
  • iShares Core MSCI International Developed Market 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.28%

The portfolio's dividend yield stands at 1.28%, providing a modest income stream. While dividends are not the primary focus of a growth portfolio, they can contribute to total returns, especially during periods of market volatility. Investors seeking higher income might consider increasing exposure to dividend-focused investments. Balancing growth and income can enhance portfolio stability and provide cash flow without sacrificing long-term growth potential.

Ongoing product costs Info

  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • iShares Core MSCI International Developed Market 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which is beneficial for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This cost efficiency aligns well with best practices for maximizing returns. It's advisable to continue monitoring and managing costs, ensuring that any changes in investment products or allocations do not significantly increase expenses.

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