A growth-focused portfolio with strong US bias and modest bond allocation

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a moderate risk tolerance and a focus on growth, seeking substantial capital appreciation over the long term. It is ideal for those comfortable with equity market volatility and looking to leverage growth opportunities, particularly within the US market. The modest bond and gold allocations provide some risk mitigation, though the investor should be prepared for potential drawdowns. This portfolio aligns with individuals aiming for wealth accumulation over an extended investment horizon.

Positions

  • SPDR® Portfolio S&P 500 Growth ETF
    SPYG - US78464A4094
    60.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    30.00%
  • iShares Gold Trust
    IAU - US4642852044
    5.00%
  • iShares 20+ Year Treasury Bond ETF
    TLT - US4642874329
    5.00%

The portfolio is primarily composed of equities, with a significant 60% allocation to the SPDR® Portfolio S&P 500 Growth ETF and 30% to the Vanguard Total Stock Market Index Fund ETF Shares. This structure reflects a strong emphasis on growth-oriented investments. The remaining 10% is split between iShares Gold Trust and iShares 20+ Year Treasury Bond ETF, providing a minor hedge against volatility. Compared to a typical balanced portfolio, this one leans heavily towards equities, which could imply higher risk. To align with balanced portfolio benchmarks, consider increasing exposure to bonds or other asset classes.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.31%, indicating strong performance. However, it has also experienced a significant maximum drawdown of -30.12%, highlighting potential volatility. When compared to common benchmarks, this performance is impressive but comes with notable risk. While past performance is not indicative of future results, this history suggests potential for high returns. To mitigate future drawdowns, consider diversifying across more asset classes or sectors.

Projection Info

The Monte Carlo simulation, which uses historical data to project future performance, indicates a median (50th percentile) potential return of 236.73% over the investment horizon. However, it's important to note that these projections are based on historical trends and do not guarantee future outcomes. With 963 out of 1,000 simulations showing positive returns, the outlook is optimistic. To enhance potential outcomes, consider regularly reviewing and adjusting the portfolio based on changing market conditions.

Asset classes

  • Stocks
    90%
  • Other
    5%
  • Bonds
    5%
  • Cash
    0%

The portfolio's asset allocation is heavily weighted towards stocks, comprising nearly 90% of the total. This concentration in equities suggests a focus on capital appreciation but may expose the portfolio to higher volatility. The bond allocation is minimal at just under 5%, which could limit the portfolio's ability to cushion against market downturns. To improve diversification, consider increasing the allocation to bonds or alternative asset classes, which could help stabilize returns.

Sectors

  • Technology
    34%
  • Telecommunications
    11%
  • Consumer Discretionary
    11%
  • Financials
    11%
  • Health Care
    7%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Utilities
    2%
  • Real Estate
    2%
  • Energy
    1%
  • Basic Materials
    1%

The sectoral allocation is heavily skewed towards technology, which accounts for over 34% of the portfolio. This concentration aligns with growth trends but may increase volatility, especially during periods of interest rate hikes. Other notable sectors include communication services and consumer cyclicals. Compared to common benchmarks, the portfolio is tech-heavy, which could be a double-edged sword. Consider balancing the sector weights to reduce reliance on technology and enhance stability.

Regions

  • North America
    90%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

The portfolio is predominantly focused on North America, with nearly 90% of its holdings concentrated in this region. This geographic bias could limit exposure to growth opportunities in other parts of the world. Compared to global benchmarks, this allocation is quite concentrated. To enhance geographic diversification and potentially reduce risk, consider adding exposure to developed and emerging markets outside of North America.

Redundant positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    SPDR® Portfolio S&P 500 Growth ETF
    High correlation

The portfolio exhibits high correlation between the SPDR® Portfolio S&P 500 Growth ETF and the Vanguard Total Stock Market Index Fund ETF Shares. This means these assets tend to move together, which can limit diversification benefits. Highly correlated assets may not provide the risk mitigation expected during market downturns. To improve diversification, consider replacing one of these ETFs with an asset that has a lower correlation to the rest of the portfolio.

Dividends

  • SPDR® Portfolio S&P 500 Growth ETF 0.40%
  • iShares 20+ Year Treasury Bond ETF 4.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.82%

The portfolio's dividend yield is relatively low at 0.82%, with the highest contribution from the iShares 20+ Year Treasury Bond ETF at 4.3%. For growth-focused investors, low dividends might be acceptable, but those seeking income may find this insufficient. Compared to income-focused portfolios, this yield is modest. If increasing income is a priority, consider reallocating some assets towards higher-yielding investments or dividend-focused funds.

Ongoing product costs

  • iShares Gold Trust 0.25%
  • SPDR® Portfolio S&P 500 Growth ETF 0.04%
  • iShares 20+ Year Treasury Bond ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term performance. Low costs mean more of your returns stay in your pocket, enhancing the compounding effect over time. Compared to industry averages, this TER is competitive and supports cost-efficient growth. Maintaining low costs is a strength, so continue to monitor expense ratios and consider replacing any higher-cost assets with more cost-effective alternatives if necessary.

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.

The portfolio could potentially be optimized for better risk-return balance using the Efficient Frontier, which identifies the best possible risk-return ratio from the current assets. However, the presence of highly correlated assets suggests limited diversification benefits. Before optimizing, consider removing or replacing these overlapping assets to achieve a more efficient allocation. Efficiency here refers to maximizing returns for a given level of risk, not necessarily diversification.

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