A growth-focused portfolio with high concentration in large-cap US equities and limited diversification

Report created on Dec 24, 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 is heavily concentrated in US large-cap equities, with 56% in the Schwab U.S. Large-Cap Growth ETF and 44% in the Fidelity Zero Large Cap Index Fund. This composition indicates a strong focus on growth, primarily driven by large-cap stocks. While this approach can yield significant returns during bull markets, it also exposes the portfolio to higher volatility during downturns due to its limited diversification. Consider adding other asset classes like bonds or international equities to balance the risk and enhance diversification.

Growth Info

Historically, the portfolio has shown impressive performance with a Compound Annual Growth Rate (CAGR) of 17.98%. This growth rate suggests strong returns over time, especially in favorable market conditions. However, it is essential to note the max drawdown of -32.96%, indicating significant potential losses during market corrections. This underscores the importance of diversification to mitigate risks during volatile periods. Evaluating the portfolio's risk-adjusted performance against benchmarks could provide additional insights into its efficiency.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a wide range of potential returns. With 1,000 simulations, the portfolio's end values range from a 5th percentile of 129.19% to a 67th percentile of 1,273.48%. While 995 simulations show positive returns, it's important to remember that past performance doesn't guarantee future results. The simulations highlight the portfolio's potential for high returns but also its exposure to risk. Consider adjusting the asset allocation to improve downside protection.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is heavily skewed towards stocks, comprising 99.89% of the total, with a negligible 0.11% in cash. This lack of asset class diversification can lead to increased risk, as the portfolio is highly sensitive to stock market fluctuations. Diversifying into other asset classes, such as bonds or real estate, could provide stability and reduce volatility. A more balanced allocation aligned with benchmark norms could enhance the portfolio's resilience during market downturns.

Sectors Info

  • Technology
    41%
  • Telecommunications
    11%
  • Health Care
    11%
  • Financials
    10%
  • Consumer Discretionary
    8%
  • Industrials
    5%
  • Consumer Discretionary
    4%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation reveals a significant concentration in technology at 41.5%, followed by communication services and healthcare. While tech-heavy portfolios can experience substantial growth, they are also more susceptible to volatility, especially during interest rate hikes or regulatory changes. To mitigate sector-specific risks, consider diversifying across more sectors. A balanced sector allocation can provide a cushion against downturns in any single industry, aligning the portfolio more closely with diversified benchmarks.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is predominantly in North America, accounting for 99.65%, with minimal allocations in Europe and Asia. This concentration in a single region may limit diversification benefits and expose the portfolio to region-specific risks. Broadening geographic exposure can enhance diversification and potentially capture growth opportunities in other markets. Assessing alignment with global benchmarks may reveal opportunities to optimize geographic balance and reduce regional risk.

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.

Current portfolio optimization shows potential improvements using the Efficient Frontier, which helps find the best risk-return ratio for a given set of assets. By adjusting allocations, the portfolio could achieve a more optimal balance between risk and return. This process focuses on maximizing returns for a given level of risk, rather than diversification. Consider exploring optimization strategies to enhance the portfolio's efficiency, ensuring alignment with your investment goals.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Weighted yield (per year) 0.22%

The portfolio's dividend yield is relatively low at 0.22%, reflecting its growth-oriented strategy. While dividends can provide steady income, they are less critical for portfolios prioritizing capital appreciation. However, for investors seeking a balance between growth and income, exploring dividend-paying assets could enhance returns. Consider whether the current yield aligns with your financial goals, and if not, explore options to incorporate higher-yielding investments.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.02%

The portfolio boasts impressively low costs, with an overall Total Expense Ratio (TER) of 0.02%. This efficient cost structure supports better long-term performance by minimizing fees that can erode returns. Maintaining low costs is a positive alignment with best practices, allowing more of the portfolio's growth to benefit the investor. Continue to monitor expense ratios and explore opportunities to further reduce costs, ensuring that the portfolio remains cost-effective.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey