Broadly Diversified Growth Portfolio with High Risk and Tech Focused Allocation

Report created on Jul 28, 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 six ETFs, with a significant focus on Vanguard Total Stock Market Index Fund ETF Shares, making up 60% of the allocation. This indicates a strong emphasis on the U.S. stock market. The inclusion of international exposure with the Vanguard Total International Stock Index Fund ETF Shares at 15% adds a touch of global diversification. The remaining ETFs, such as Invesco QQQ Trust and ARK Innovation ETF, focus on specific sectors or themes, indicating a growth-oriented strategy. This diversification across different ETFs helps in spreading risk while maintaining a focus on growth.

Growth Info

Historically, the portfolio has demonstrated strong performance with a compound annual growth rate (CAGR) of 13.52%. This impressive return is indicative of the growth-oriented nature of the portfolio. However, it has also experienced a maximum drawdown of -30.24%, highlighting the inherent volatility and risk associated with such a portfolio. The 16 days that make up 90% of returns suggest that the portfolio's performance is driven by a few significant market movements. This performance history underscores the importance of maintaining a long-term perspective to weather market fluctuations.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected based on a hypothetical initial investment. The simulation shows a wide range of potential outcomes, with the 5th percentile indicating a possible loss of -50.57%, while the 67th percentile projects a substantial gain of 388.77%. The median outcome suggests an increase of 186.32%. With 825 simulations yielding positive returns, the annualized return of all simulations stands at 12.09%. This highlights the portfolio's potential for significant growth, albeit with considerable risk.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.62% of the total allocation. This high equity exposure aligns with the growth profile and indicates a strategy focused on capital appreciation. The minimal allocation to cash and other asset classes suggests a strong commitment to staying fully invested in equities. This approach can lead to higher returns in the long run but also increases exposure to market volatility. Investors should be comfortable with the potential for short-term losses in exchange for long-term gains.

Sectors Info

  • Technology
    34%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation reveals a significant concentration in technology, accounting for 33.55% of the portfolio. This focus on tech reflects a bet on the sector's continued growth and innovation. Other notable sectors include financial services, consumer cyclicals, and healthcare, each contributing around 10% to the portfolio. While this sector diversification provides some balance, the heavy tech weighting could lead to increased volatility. Investors should be aware of the risks associated with sector-specific downturns and consider whether this aligns with their risk tolerance.

Regions Info

  • North America
    84%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 84.08% of assets allocated to this region. This concentration on the U.S. market suggests a belief in its continued strength and potential for growth. The remaining allocation is spread across Europe, Asia, and other regions, providing some international diversification. However, the limited exposure to emerging markets and other regions may restrict potential gains from global economic growth. Investors should consider whether this geographic allocation aligns with their views on global market opportunities.

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 optimization chart suggests that while the current allocation is well-suited for growth, there may be opportunities to further optimize risk and return. By moving along the efficient frontier, an investor can achieve a more conservative or riskier portfolio depending on their preferences. This could involve adjusting the weightings of certain ETFs or exploring additional asset classes. However, before making changes, it's essential to ensure that any adjustments align with the investor's risk appetite and long-term financial objectives.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Invesco NASDAQ Next Gen 100 ETF 0.80%
  • iShares Semiconductor ETF 0.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.30%

The portfolio's overall dividend yield is 1.3%, with contributions from various ETFs. The Vanguard Total International Stock Index Fund ETF Shares offers the highest yield at 3.0%, providing a steady income stream. Other ETFs, like the Vanguard Total Stock Market Index Fund ETF Shares and Invesco QQQ Trust, offer lower yields. While the focus is primarily on growth, the presence of dividends can provide some income stability. Investors seeking higher income may need to consider additional income-generating assets or strategies.

Ongoing product costs Info

  • ARK Innovation ETF 0.75%
  • Invesco QQQ Trust 0.20%
  • Invesco NASDAQ Next Gen 100 ETF 0.15%
  • iShares Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, reflecting a cost-effective investment strategy. The Vanguard Total Stock Market Index Fund ETF Shares and Vanguard Total International Stock Index Fund ETF Shares have notably low costs, contributing to the overall efficiency. However, the ARK Innovation ETF's expense ratio of 0.75% is relatively high, which could impact net returns over time. Keeping costs low is crucial for maximizing returns, and investors should regularly review the expense ratios of their holdings to ensure they align with their investment strategy.

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