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

Report created on Jan 6, 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 equities, with 65% in the Vanguard Total Stock Market ETF and 30% in the Vanguard U.S. Minimum Volatility ETF. A small 5% allocation to MicroStrategy Inc. adds some individual stock exposure. Compared to typical growth portfolios, this one is less diversified, relying heavily on US equities. A more balanced portfolio might include a mix of international stocks, bonds, and alternative assets to spread risk and capture global growth opportunities. Consider diversifying asset types to enhance stability and potential returns.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 16.4%. This impressive growth reflects the strong performance of US equities over recent years. However, the maximum drawdown of -34.43% indicates significant volatility, which is common in growth-focused portfolios. While past performance can provide insights, it doesn't guarantee future results. To manage potential downturns, consider strategies like rebalancing or introducing more defensive assets to mitigate risk.

Projection Info

The forward projection uses Monte Carlo simulations to estimate potential future outcomes based on historical data. With 1,000 simulations, the portfolio shows a wide range of possible results, with a 5th percentile return of 16.9% and a median return of 2,559.54%. The high number of simulations with positive returns (958) suggests a favorable outlook, yet it's important to remember that these projections are not predictions. They help assess potential risks and rewards, guiding informed decision-making.

Asset classes Info

  • Stocks
    100%

This portfolio is nearly entirely composed of stocks, with a small cash allocation. Such a high concentration in equities can offer substantial growth potential but also increases exposure to market volatility. Compared to diversified portfolios that include bonds or alternative assets, this one is more susceptible to market swings. Introducing other asset classes could help balance risk and improve long-term stability, especially during periods of market uncertainty.

Sectors Info

  • Technology
    32%
  • Health Care
    12%
  • Financials
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Discretionary
    8%
  • Consumer Staples
    7%
  • Utilities
    4%
  • Energy
    3%
  • Real Estate
    3%
  • Basic Materials
    2%

The portfolio is heavily concentrated in the technology sector, which makes up over 32% of the holdings. While this can drive growth, it also exposes the portfolio to sector-specific risks, such as regulatory changes or tech market downturns. Other sectors like healthcare and financial services provide some balance, but the overall sector diversification is limited. To reduce risk, consider increasing exposure to underrepresented sectors, potentially enhancing resilience against sector-specific volatility.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With over 99% of the portfolio's geographic allocation in North America, there's limited exposure to international markets. This concentration can lead to missed opportunities in global growth regions and increases vulnerability to US market fluctuations. Compared to global benchmarks, this portfolio lacks geographic diversification. Expanding into emerging markets or developed regions outside North America could provide a buffer against localized economic downturns and capture diverse growth opportunities.

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's current allocation could be optimized using the Efficient Frontier, which helps identify the best risk-return balance based on existing assets. By adjusting the weightings within the portfolio, it may be possible to achieve a more favorable risk-return ratio. This optimization doesn't necessarily mean adding new assets but rather reallocating current ones to enhance efficiency. While this approach can improve performance, it's essential to align it with the investor's risk tolerance and goals.

Dividends Info

  • Vanguard U.S. Minimum Volatility 1.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.14%

The portfolio's dividend yield is relatively low at 1.14%, reflecting a focus on growth over income. While dividends can provide a steady income stream and cushion against volatility, growth-oriented portfolios often prioritize capital appreciation. For investors seeking income, increasing exposure to high-dividend stocks or funds might be beneficial. However, if the primary goal is growth, maintaining the current focus on capital gains may be appropriate, with dividends as a secondary consideration.

Ongoing product costs Info

  • Vanguard U.S. Minimum Volatility 0.13%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.06%. This low-cost structure supports better long-term performance by minimizing the drag on returns, which is especially important in growth portfolios. Compared to higher-cost funds, this portfolio is well-positioned to maximize net returns. Maintaining a focus on cost-efficient investments can enhance overall performance, allowing more of the portfolio's growth to directly benefit the investor.

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