A growth-focused portfolio with high risk and low geographic diversification

Report created on Jan 16, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 99.8% in stocks spread across three ETFs: Vanguard Total Stock Market Index Fund ETF, iShares Russell Top 200 Growth ETF, and Invesco S&P MidCap Momentum ETF. This composition is typical for growth-focused portfolios, aiming for capital appreciation rather than income generation. While this allocation can lead to substantial returns, it also increases exposure to market volatility. Consider diversifying into other asset classes like bonds or real estate to mitigate risk and enhance stability.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 16.25%. This indicates strong growth, significantly outperforming many benchmarks. However, the maximum drawdown of -34.15% highlights the potential for significant losses during market downturns. While past performance is not indicative of future results, it provides a reference point for understanding the portfolio's behavior in different market conditions. To manage risk, consider strategies like rebalancing or adding defensive assets.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, using historical data to forecast future performance. The median projection shows a 742.4% increase, with a high probability of positive returns. However, these projections are based on historical data and assumptions that may not hold in the future. It's essential to regularly review and adjust the portfolio to align with changing market conditions and personal investment goals. Diversifying across asset classes and geographies can help manage uncertainty.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is heavily concentrated in equities, with minimal cash holdings. This lack of diversification across asset classes can lead to increased volatility and risk. In comparison, a more balanced portfolio might include bonds or alternative investments to cushion against market fluctuations. By incorporating different asset classes, the portfolio could achieve a more stable risk-return profile. Diversifying beyond stocks can also provide opportunities to capture returns from various economic environments.

Sectors Info

  • Technology
    30%
  • Consumer Discretionary
    15%
  • Financials
    15%
  • Industrials
    13%
  • Telecommunications
    8%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Energy
    2%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Utilities
    1%

Sectorally, the portfolio is concentrated, with technology making up over 30%. This focus can lead to higher volatility, especially during periods of technological sector downturns. While technology can drive growth, diversifying into other sectors can reduce risk and provide stability. Currently, sectors like energy and real estate are underrepresented. Balancing sector exposure can help mitigate risks associated with sector-specific downturns and capture growth opportunities across different industries.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is predominantly in North America, with minimal allocation to other regions. This lack of geographic diversification may limit potential growth opportunities and increase vulnerability to region-specific risks. Comparing this to a global benchmark, which typically includes more international exposure, highlights the portfolio's regional concentration. Consider gradually increasing exposure to international markets to enhance diversification and potentially improve returns by capturing growth in emerging and developed markets outside North America.

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 potentially benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This involves adjusting the allocation to achieve the maximum expected return for a given level of risk. While this optimization focuses solely on the current assets, it does not account for diversification or other investment goals. Regularly reassessing and rebalancing the portfolio can ensure it remains aligned with risk tolerance and performance objectives.

Dividends Info

  • iShares Russell Top 200 Growth ETF 0.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 0.67%

With a total dividend yield of 0.67%, the portfolio is not designed for income generation. This yield is relatively low, reflecting its growth focus. For investors seeking income, higher-yielding assets might be necessary. However, for those prioritizing capital appreciation, a low dividend yield is acceptable. If income is a goal, consider incorporating dividend-focused investments. Balancing growth and income can provide a steadier cash flow while still allowing for capital appreciation.

Ongoing product costs Info

  • iShares Russell Top 200 Growth ETF 0.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is relatively low and supports better long-term performance by minimizing costs. Keeping costs low is crucial for maximizing net returns. However, regularly reviewing and comparing the fees of current holdings with other similar options can ensure that the portfolio remains cost-effective. If lower-cost alternatives are available without sacrificing quality, consider making adjustments to further enhance cost efficiency.

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