A growth-focused portfolio with high US exposure and limited diversification

Report created on Jan 12, 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 US equities, with three ETFs and two individual stocks comprising the entirety of its holdings. The Vanguard S&P 500 ETF dominates at 50%, followed by the Avantis U.S. Small Cap Value ETF and Invesco NASDAQ 100 ETF at 20% each. Meta Platforms Inc. and Tesla Inc. make up the remaining 10%. Compared to a typical diversified portfolio, this one lacks exposure to other asset classes like bonds or international equities. While this focus can amplify growth, it also increases risk, particularly in volatile markets. Consider diversifying across more asset classes to balance risk and return.

Growth Info

Historically, the portfolio has performed impressively, achieving a CAGR of 18.34%. This high growth rate suggests strong past performance, particularly in bullish markets. However, the max drawdown of -27.18% indicates significant vulnerability during downturns. This volatility is typical for growth-focused portfolios, which often experience larger swings. To mitigate potential losses, consider incorporating assets with lower volatility or defensive characteristics, which can help stabilize returns during market corrections.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 simulations. The median outcome suggests a potential growth of 1,042.24%, with most simulations resulting in positive returns. Monte Carlo analysis uses historical data to forecast potential outcomes, but it's essential to remember that past trends don't guarantee future results. The optimistic projections align with the portfolio's growth focus, but it's wise to prepare for less favorable scenarios by maintaining a diversified strategy.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash allocation. This concentration in equities aligns with a growth strategy but limits diversification benefits. A well-diversified portfolio typically includes a mix of asset classes, such as bonds or real estate, to spread risk. While equities offer higher potential returns, they also come with increased volatility. To enhance diversification, consider adding alternative asset classes that can provide stability and reduce overall risk.

Sectors Info

  • Technology
    28%
  • Consumer Discretionary
    16%
  • Telecommunications
    13%
  • Financials
    12%
  • Industrials
    8%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation reveals a significant concentration in technology at nearly 28%, followed by consumer cyclicals and communication services. This tech-heavy bias can lead to higher volatility, especially during interest rate hikes or tech-specific downturns. While the portfolio covers several sectors, the imbalance could expose it to sector-specific risks. Balancing sector weights can enhance diversification and reduce reliance on a single sector's performance. Consider exploring underrepresented sectors for a more balanced approach.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with 98.86% exposure. This limited geographic diversification could heighten vulnerability to regional economic shifts. While the US market offers growth opportunities, exposure to international markets can provide additional diversification and reduce risk. Consider gradually increasing exposure to developed and emerging markets outside North America to capture global growth and hedge against regional downturns.

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 can be optimized using the Efficient Frontier, which seeks the best risk-return balance based on current assets. This optimization doesn't necessarily mean adding new assets but adjusting existing allocations for better efficiency. By shifting weights within the portfolio, you can potentially enhance returns for a given level of risk. Regularly review your asset allocation to ensure it aligns with your risk tolerance and investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Meta Platforms Inc. 0.30%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.10%

The portfolio's overall dividend yield is 1.1%, with contributions from the ETFs and Meta Platforms Inc. Dividends can provide a steady income stream, which is beneficial for long-term growth strategies. However, the focus here is more on capital appreciation than income generation. For investors seeking higher income, consider incorporating higher-yielding assets or dividend-focused funds. This adjustment can enhance cash flow while maintaining growth potential.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.10%

Portfolio costs are relatively low, with a total expense ratio of 0.1%. This cost-effectiveness supports better long-term performance by minimizing fee-related drag on returns. Low costs are a positive aspect of this portfolio, allowing more of your investment to compound over time. Continue to monitor fees and consider cost-effective alternatives if any holdings become expensive. This vigilance can help maintain the portfolio's cost advantage.

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