Growth-focused portfolio with a tech bias and high U.S. exposure

Report created on Apr 2, 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 ETFs, comprising 73% of the total allocation, with a significant single-stock position in NVIDIA at 17%. This composition leans towards large-cap U.S. equities, with a focus on growth. Compared to a benchmark like the S&P 500, this portfolio is less diversified, as it lacks exposure to bonds or international equities. Such a structure can lead to higher volatility but also offers the potential for substantial capital appreciation. To enhance diversification, consider incorporating additional asset classes like bonds or international stocks to balance risk and return.

Growth Info

The portfolio has demonstrated an impressive CAGR of 22.09%, substantially outperforming typical market benchmarks. However, the max drawdown of -31.53% indicates significant volatility, which is common in growth-oriented portfolios. While past performance can offer insights, it doesn't guarantee future results. The high returns are attractive, but they come with increased risk, as evidenced by the drawdown. To mitigate this, consider strategies to reduce volatility, such as diversifying into less correlated assets or sectors.

Projection Info

A Monte Carlo simulation, which uses historical data to predict future outcomes, shows strong potential for this portfolio. With a median projection of 968.2% growth, the portfolio is poised for substantial gains. However, it's important to remember that simulations are based on past data and assumptions, which might not hold in the future. To prepare for various market conditions, consider stress-testing the portfolio under different scenarios, ensuring that it aligns with your risk tolerance and investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can lead to significant growth but also higher volatility. Compared to a balanced portfolio that includes bonds and other asset types, this all-equity allocation may lack stability during market downturns. To enhance diversification and reduce risk, consider adding other asset classes, such as fixed income or real estate, which can provide income and stability, especially during periods of market turbulence.

Sectors Info

  • Technology
    39%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    6%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Technology dominates the portfolio, making up 39% of the allocation, followed by financial services and consumer cyclicals. This sectoral concentration can lead to higher volatility, particularly during tech sector downturns or interest rate hikes. While tech-heavy portfolios can offer significant growth, they are also more sensitive to market changes. To mitigate this risk, consider rebalancing towards underrepresented sectors like healthcare or utilities, which can provide stability and income.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is overwhelmingly concentrated in North America, with 99% exposure. This geographic concentration limits diversification and exposes the portfolio to regional risks, such as economic downturns or policy changes in the U.S. Compared to global benchmarks, this portfolio lacks international diversification. To reduce regional risk, consider adding international equities, particularly from emerging markets, which can offer growth opportunities and diversify economic exposure.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    27%
  • Mid-cap
    16%
  • Small-cap
    8%
  • Micro-cap
    7%

The portfolio is heavily weighted towards mega and large-cap stocks, making up 69% of the allocation. This focus can lead to stability and established growth, as these companies often have strong market positions. However, it may limit exposure to the higher growth potential of smaller companies. To balance growth and risk, consider increasing exposure to mid and small-cap stocks, which can provide diversification and capitalize on emerging market trends.

Redundant positions Info

  • SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, particularly the SPDR S&P 500 ETF Trust and Vanguard S&P 500 ETF. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, such correlation can amplify losses. To improve diversification, consider replacing one of these ETFs with an asset that has a lower correlation, such as international stocks or sector-specific funds, to better manage risk.

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 aims to achieve the best possible risk-return ratio. Currently, the portfolio's asset allocation may not be fully optimized due to high correlations and sector concentration. By adjusting the weights of existing assets, especially reducing overlaps and increasing diversification, you can potentially enhance returns without significantly increasing risk. This process involves reallocating investments to achieve a more balanced risk-return profile.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.40%
  • Fidelity® High Dividend ETF 2.20%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • SPDR S&P 500 ETF Trust 1.00%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.70%
  • Weighted yield (per year) 1.28%

The portfolio has a total dividend yield of 1.28%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 3.70%. Dividends can provide a steady income stream and reduce reliance on capital gains for returns. For growth-focused investors, this yield is modest but adds a layer of income stability. To enhance dividend income, consider increasing allocations to high-yield ETFs or dividend-focused stocks, which can provide additional income and reduce overall portfolio volatility.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Fidelity® High Dividend ETF 0.15%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.09%

With a Total Expense Ratio (TER) of 0.09%, the portfolio is cost-efficient, which is beneficial for long-term performance. Low costs mean more of your investment returns stay in your pocket, compounding over time. Compared to industry averages, this TER is impressively low and supports better long-term growth. To maintain this efficiency, regularly review the expense ratios of your holdings, ensuring they remain competitive and aligned with your investment strategy.

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