A concentrated growth portfolio with high tech exposure and strong historical returns

Report created on Jan 1, 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 evenly split among four positions: two individual stocks and two ETFs. This equal allocation can limit diversification since each position holds significant weight. Typically, a more diversified portfolio might include a wider range of asset types, such as bonds or international assets, to mitigate risk. While this concentrated structure allows for potential high returns, it also increases exposure to market volatility. To enhance diversification, consider adding different asset classes or more varied geographic exposure.

Growth Info

Historically, the portfolio has demonstrated impressive growth, with a CAGR of 30.36%. However, it also experienced a significant max drawdown of -60.37%, indicating potential vulnerability during market downturns. While past performance is not indicative of future results, understanding these trends helps illustrate the portfolio's risk-reward profile. To manage potential volatility, consider strategies that could provide downside protection, such as incorporating assets with lower correlation to existing holdings.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of potential returns. With a median expected growth of 3,959.21%, the portfolio has high growth potential but also significant variability. While simulations offer valuable insights, they cannot predict future market conditions accurately. Consider using these projections to gauge risk tolerance and adjust the portfolio to align with long-term investment goals, possibly by reducing exposure to high-volatility assets.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with a negligible cash position. This concentration in a single asset class can increase risk, especially in volatile market conditions. Typically, diversified portfolios include a mix of asset classes like bonds, real estate, or commodities to balance risk and reward. To improve diversification, consider introducing other asset classes that may provide stability during market fluctuations, enhancing the portfolio's resilience.

Sectors Info

  • Technology
    40%
  • Consumer Staples
    29%
  • Financials
    7%
  • Consumer Discretionary
    6%
  • Health Care
    6%
  • Telecommunications
    4%
  • Industrials
    4%
  • Energy
    3%
  • Basic Materials
    1%

The portfolio is predominantly concentrated in the technology and consumer defensive sectors, accounting for over two-thirds of the total allocation. This concentration could lead to higher volatility, especially if these sectors face downturns. A more balanced sector allocation, aligning with benchmark indices, could mitigate sector-specific risks. Consider diversifying into underrepresented sectors to achieve a more stable performance across different market cycles.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is overwhelmingly focused on North America, with minimal allocation to other regions. While this can benefit from the strong performance of the U.S. market, it also limits diversification. Exposure to diverse geographic regions can reduce risk by spreading investments across different economic environments. Consider adding international assets to the portfolio to increase geographic diversification and potentially capture growth in emerging markets.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. This method suggests reallocating existing assets to achieve a more efficient balance. While this doesn't guarantee diversification, it can enhance returns relative to risk. Consider using optimization tools to explore how reallocating current holdings might improve the portfolio's efficiency.

Dividends Info

  • Costco Wholesale Corp 0.50%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Weighted yield (per year) 1.12%

The portfolio's dividend yield is modest at 1.12%, primarily driven by the Schwab U.S. Dividend Equity ETF. Dividends can provide a steady income stream and reduce reliance on capital gains for returns. Given the growth focus of this portfolio, the low dividend yield is expected. However, if income is a priority, consider increasing exposure to higher-yielding assets or funds to enhance cash flow.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are impressively low, with a total TER of just 0.02%. This cost efficiency supports better long-term performance by minimizing expenses that erode returns. Maintaining low costs is a positive aspect of this portfolio, and it aligns well with best practices for maximizing investment growth. Continue to monitor expense ratios and seek opportunities to reduce costs further, ensuring that they remain competitive.

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