Growth-oriented portfolio with strong tech focus and limited international exposure

Report created on Apr 27, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards U.S. equities, with a significant allocation to large-cap stocks. The Vanguard S&P 500 ETF dominates at nearly half of the portfolio, followed by the Schwab U.S. Large-Cap Growth ETF and Invesco NASDAQ 100 ETF. This composition indicates a strong bias towards growth and large-cap stocks, which may align with a risk-tolerant growth strategy. However, the low allocation to international equities and small caps suggests limited diversification. A more balanced allocation could potentially enhance risk management and capture broader market opportunities.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 13.29%, outperforming many benchmarks. This impressive growth is partly due to the significant exposure to large-cap U.S. equities, which have performed well over the past decade. However, the portfolio also experienced a maximum drawdown of -28.74%, highlighting its vulnerability during market downturns. While past performance provides some insight, it's important to remember that it does not guarantee future results, and diversification could mitigate potential losses in challenging market conditions.

Projection Info

Using Monte Carlo simulations, which involve running numerous scenarios based on historical data, the portfolio shows a median projected growth of 290% over the investment horizon. This suggests a strong potential for future gains, although the simulations also indicate a wide range of possible outcomes. With 954 out of 1,000 simulations showing positive returns, the outlook is generally favorable. However, it's crucial to note that simulations rely on historical data and assumptions, which may not fully account for future market dynamics or unforeseen events.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to bonds, cash, or alternative assets. This lack of diversification across asset classes increases exposure to equity market volatility. While a 100% stock allocation can drive growth, it also amplifies risk, particularly during market downturns. Incorporating bonds or other asset classes could provide a buffer against volatility and enhance stability, especially for investors seeking a more balanced risk-return profile.

Sectors Info

  • Technology
    38%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    10%
  • Financials
    10%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, which comprises 38% of the total allocation. This tech-heavy focus can lead to higher volatility, particularly during periods of rising interest rates or regulatory changes. While technology has been a strong performer, diversifying into other sectors such as healthcare, financials, or consumer staples could reduce sector-specific risks and provide a more balanced approach to capturing growth across different economic cycles.

Regions Info

  • North America
    96%
  • Europe Developed
    2%
  • Asia Emerging
    1%

With 96% of the portfolio allocated to North American equities, there is limited geographic diversification. This concentration exposes the portfolio to regional economic and political risks. Expanding the geographic allocation to include more exposure to developed and emerging markets could enhance diversification and reduce reliance on the U.S. market. This approach might also capture growth opportunities in regions with varying economic cycles and growth prospects.

Market capitalization Info

  • Mega-cap
    51%
  • Large-cap
    30%
  • Mid-cap
    15%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is predominantly invested in mega and large-cap stocks, with minimal exposure to small and micro-cap companies. This allocation favors stability and established growth but may miss out on the high-growth potential of smaller companies. Including a more diverse range of market capitalizations could enhance growth prospects and provide exposure to different market dynamics. Small and mid-cap stocks often offer unique opportunities for capital appreciation.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio includes highly correlated assets, particularly between the Schwab U.S. Large-Cap Growth ETF and the Invesco NASDAQ 100 ETF. High correlation means these assets tend to move in tandem, limiting diversification benefits. In market downturns, this can amplify losses. Reducing overlap by selecting less correlated assets can improve risk management and enhance portfolio resilience. Diversifying with assets that have different risk-return profiles could provide better overall balance.

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 benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, the portfolio's allocation may not fully exploit diversification benefits, particularly given the high correlation between some assets. Adjusting allocations to maximize returns for a given level of risk could enhance overall efficiency. It's important to note that this optimization considers only existing assets and their allocation, aiming to achieve an optimal risk-return balance.

Dividends Info

  • Pacer US Small Cap Cash Cows 100 ETF 1.30%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.07%

The portfolio's dividend yield is relatively low at 1.07%, reflecting its growth-oriented strategy. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. Investors seeking regular income might consider increasing exposure to dividend-focused funds or stocks. However, maintaining a balance between growth and income is essential to align with long-term investment goals and risk tolerance.

Ongoing product costs Info

  • Pacer US Small Cap Cash Cows 100 ETF 0.59%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, which supports better long-term performance by minimizing costs. Low fees are a positive aspect, as they enhance net returns over time. However, it's crucial to ensure that cost savings do not come at the expense of diversification or risk management. Continuously reviewing and optimizing the cost structure while maintaining a balanced portfolio is a prudent approach.

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