A growth-oriented portfolio with strong tech focus and moderate geographic diversification

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is evenly split across four ETFs, each holding 25% of the total value. This structure provides a balanced approach within a single asset class, namely equities. While this allocation supports a growth profile, it lacks diversification across different asset classes like bonds or real estate, which could offer stability. A common benchmark might include a mix of equities and fixed income for balance. Consider adding other asset classes to enhance diversification and potentially reduce overall risk.

Growth Info

Historically, the portfolio has delivered impressive returns with a Compound Annual Growth Rate (CAGR) of 17.71%. This indicates strong growth potential, although it's important to remember that past performance doesn't guarantee future results. The portfolio's maximum drawdown of -34.01% highlights potential volatility. Comparing this to a benchmark like the S&P 500 can provide context, as similar indices often experience significant swings. It's crucial to prepare for such fluctuations by ensuring your risk tolerance aligns with these potential drawdowns.

Projection Info

Using Monte Carlo simulations, this portfolio's potential future outcomes show a wide range of possibilities. With a 50th percentile projection of 795.93% growth, it suggests strong potential returns. However, it's essential to note that these projections are based on historical data and don't guarantee future performance. Monte Carlo simulations use random sampling to predict various outcomes, providing a range of possible scenarios. Consider these projections as a tool to understand potential risks and rewards, but always be prepared for unexpected market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in equities, with nearly 100% allocation to stocks. Such a concentration in one asset class can lead to higher returns but also increases risk, especially during market downturns. In comparison, a more diversified portfolio might include bonds or alternative investments to mitigate volatility. Expanding beyond equities could provide a buffer during periods of market stress, offering more consistent returns. Consider gradually introducing other asset classes to reduce risk and enhance long-term stability.

Sectors Info

  • Technology
    48%
  • Financials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio is predominantly concentrated in the technology sector, accounting for 48% of the total allocation. This sector focus can lead to high growth potential but also increases vulnerability to sector-specific risks, such as regulatory changes or technological disruptions. Compared to a benchmark like the S&P 500, which has a more balanced sector distribution, this concentration might lead to higher volatility. Diversifying into other sectors could help mitigate these risks and provide more stable returns over time.

Regions Info

  • North America
    95%
  • Asia Developed
    3%
  • Europe Developed
    2%

Geographic exposure is heavily skewed towards North America, comprising over 94% of the portfolio. While this aligns with a focus on established markets, it limits exposure to potential growth opportunities in other regions. A more balanced geographic allocation could enhance diversification and reduce region-specific risks. Benchmarks often include a mix of global equities to capture varied economic cycles. Consider exploring investments in underrepresented regions to tap into broader market dynamics and potentially improve risk-adjusted returns.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard S&P 500 ETF and Vanguard Growth Index Fund ETF Shares. High correlation means these assets tend to move in the same direction, reducing diversification benefits. In market downturns, this could amplify losses. Diversification aims to hold assets that react differently to market conditions, spreading risk. Consider replacing one of these ETFs with a less correlated option to enhance diversification and potentially improve risk management.

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.

To optimize the risk-return ratio, consider using the Efficient Frontier, which involves adjusting asset weights to achieve the best possible trade-off. Currently, the portfolio's high correlation among certain assets limits diversification benefits, potentially affecting efficiency. By reducing overlap and incorporating a broader range of asset classes, you can move closer to the Efficient Frontier. This approach aims to maximize returns for a given level of risk, ensuring your portfolio is aligned with your financial goals.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.70%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 1.48%

The portfolio's overall dividend yield stands at 1.48%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 3.7%. Dividends can provide a steady income stream, which is particularly beneficial in volatile markets. However, the focus on growth-oriented ETFs means the dividend yield is relatively modest. For investors seeking income, higher-yielding assets might be more appealing. Balancing growth with income-generating investments can offer both capital appreciation and regular cash flow.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.12%

The total expense ratio (TER) of the portfolio is 0.12%, which is impressively low. This cost efficiency supports better long-term performance, as lower fees mean more of your returns stay in your pocket. Compared to other investment options, this cost structure is highly competitive. Keeping costs low is a crucial factor in maximizing net returns over time. Continue monitoring expense ratios to ensure they remain favorable, and consider switching to lower-cost alternatives if available to further enhance performance.

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