Growth-Focused Portfolio with High Risk and Moderate Diversification for Ambitious Investors

Report created on Nov 30, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed predominantly of ETFs, with a heavy focus on U.S. large-cap growth stocks, accounting for 50%. The remaining allocation includes U.S. small-cap value, developed and emerging markets, and mid-cap quality stocks. The portfolio is moderately diversified, with a significant tilt towards growth-oriented investments. This composition suggests a focus on capital appreciation rather than income generation. Balancing growth and value, it offers exposure to various market segments, which can help mitigate some risks associated with market volatility.

Growth Info

Historically, this portfolio has shown strong performance, with a compound annual growth rate (CAGR) of 19.67%. However, it has also experienced a significant maximum drawdown of -36.48%, indicating susceptibility to market downturns. The returns are concentrated in a few days, suggesting a high level of volatility. This historical performance reflects the portfolio's growth-oriented nature, which can lead to substantial gains but also substantial losses. To manage this risk, consider strategies to smooth out returns over time.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential outcomes. The 5th percentile projects a 30.58% return, while the median is 510.74%, and the 67th percentile is 832.4%. This variance highlights the inherent uncertainty in future market conditions. Monte Carlo simulations provide a probabilistic view of potential outcomes, helping investors understand the range of possible returns. Consider reviewing your risk tolerance and time horizon to ensure alignment with these projections.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.58% of the asset allocation. This concentration in equities can lead to higher returns but also increases exposure to market volatility. A minimal allocation to cash and other assets suggests limited liquidity and diversification. For investors seeking to reduce risk, consider incorporating more fixed-income or alternative asset classes to balance the portfolio and provide stability during market downturns.

Sectors Info

  • Technology
    29%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Health Care
    8%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is diverse, with a significant emphasis on technology, financial services, and consumer cyclicals. These sectors are known for their growth potential but can be volatile. The portfolio has limited exposure to defensive sectors like utilities and consumer defensives, which can provide stability during economic downturns. To enhance sector diversification, consider rebalancing to include more defensive sectors, which can help mitigate risk and provide more consistent returns.

Regions Info

  • North America
    86%
  • Asia Emerging
    4%
  • Europe Developed
    4%
  • Asia Developed
    2%
  • Japan
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily concentrated in North America, with 85.94% exposure. This creates a regional bias that could impact performance if the U.S. market underperforms. Limited exposure to emerging markets and other regions suggests potential for increased international diversification. To reduce geographic risk, consider gradually increasing exposure to other regions, which can provide access to different economic cycles and growth 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's optimization chart suggests potential for enhancement by adjusting along the efficient frontier. Investors can achieve a riskier portfolio by increasing exposure to high-growth assets or a more conservative one by incorporating more fixed-income securities. Before optimizing, focus on ensuring alignment with risk tolerance and financial goals. Once this is achieved, explore rebalancing strategies to enhance returns and reduce volatility, considering the efficient frontier as a guide for potential adjustments.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.70%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 1.33%

The portfolio's dividend yield is relatively low at 1.33%, reflecting its growth-oriented focus. While some holdings, like the Invesco S&P MidCap Quality ETF, offer higher yields, the overall income generation is modest. For investors seeking income, this may not be sufficient to meet cash flow needs. Consider evaluating the role of dividends in your investment strategy and, if needed, adjust the portfolio to include higher-yielding assets to increase income potential.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is low at 0.12%, indicating cost-effective management. The Schwab U.S. Large-Cap Growth ETF has the lowest expense ratio at 0.04%, while the Avantis® U.S. Small Cap Value ETF and Invesco S&P MidCap Quality ETF are higher at 0.25%. Keeping costs low is crucial for maximizing net returns. Regularly review expense ratios to ensure they remain competitive and consider lower-cost alternatives if necessary to maintain cost efficiency.

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