A growth-focused portfolio with strong tech exposure and limited international diversification

Report created on Jan 9, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 70% in the Schwab U.S. Large-Cap Growth ETF and 30% in the Schwab S&P 500 Index Fund. This composition leans heavily towards growth stocks, which can offer significant capital appreciation potential. However, it lacks diversification, as it is concentrated in a single asset class and primarily in the U.S. market. For a more balanced approach, consider diversifying into other asset classes like bonds or international equities to spread risk and potentially enhance returns.

Growth Info

Historically, the portfolio has delivered strong performance with a Compound Annual Growth Rate (CAGR) of 16.68%. However, it experienced a maximum drawdown of -32.77%, indicating significant volatility. This reflects the inherent risk in a growth-focused portfolio, which can lead to substantial fluctuations during market downturns. While past performance is not indicative of future results, the historical data suggests a capacity for high returns, albeit with accompanying risk. Investors should assess their comfort with such volatility in relation to their financial goals.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns. The median projection shows a 659.78% return, while the 5th percentile indicates a 145.19% return. These simulations reveal the uncertainty and potential variability in future performance. Although all simulations resulted in positive returns, it's crucial to remember that these are hypothetical scenarios. Investors should consider the potential for both high returns and significant losses when planning their investment strategy.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, with 99.78% allocated to equities. While this can drive growth, it also increases exposure to market volatility. A more diversified portfolio typically includes a mix of asset classes, such as bonds or real estate, to mitigate risk and smooth out returns. By incorporating other asset classes, investors can potentially achieve a more balanced risk-return profile, which may be more suitable for those seeking stability alongside growth.

Sectors Info

  • Technology
    43%
  • Telecommunications
    12%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Financials
    9%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Consumer Discretionary
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, comprising 43.30% of the total allocation. While tech stocks have driven significant growth, this concentration can lead to higher volatility, especially during periods of economic uncertainty or interest rate hikes. Balancing sector exposure by incorporating defensive sectors, like utilities or consumer staples, can reduce risk and provide more consistent returns. Diversifying across sectors ensures that the portfolio is not overly reliant on the performance of a single industry.

Regions Info

  • North America
    100%

With 99.68% of the portfolio's assets allocated to North America, there is minimal exposure to international markets. This geographic concentration limits diversification and may expose the portfolio to region-specific risks. By diversifying geographically, investors can tap into growth opportunities in emerging markets and reduce reliance on the U.S. economy. Consider adding international equities or funds to broaden the geographic scope and enhance the portfolio's resilience against regional economic 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.

Optimization using the Efficient Frontier suggests that the current asset allocation could be adjusted to improve the risk-return ratio. The Efficient Frontier represents the set of optimal portfolios offering the highest expected return for a defined level of risk. By reallocating within the existing assets, it may be possible to achieve a more efficient portfolio. However, this optimization focuses solely on the current assets and does not account for diversification into new asset classes or regions.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab S&P 500 Index Fund 1.20%
  • Weighted yield (per year) 0.64%

The portfolio's dividend yield is relatively low at 0.64%, reflecting its focus on growth rather than income. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. Investors seeking income might consider increasing exposure to dividend-paying stocks or funds. While growth stocks offer capital appreciation, incorporating dividend stocks can enhance income and provide a cushion during market downturns.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab S&P 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of just 0.03%. This cost efficiency supports better long-term performance, as lower fees mean more of the portfolio's returns are retained by the investor. Maintaining a focus on low-cost investments is a sound strategy for enhancing net returns. Investors should continue to monitor expenses and consider cost-effective options when making adjustments to their portfolio.

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