A growth-focused portfolio with significant tech exposure and robust diversification across sectors

Report created on Jan 27, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with a significant 44.86% allocation to the Vanguard S&P 500 ETF. Emerging markets are represented by a 21.85% allocation in the Schwab Emerging Markets Equity ETF. Technology is another focus, with a 15.92% investment in the Technology Select Sector SPDR® Fund. A smaller portion, 10.85%, is invested in the iShares U.S. Insurance ETF, with a 6.52% direct investment in Advanced Micro Devices Inc. The portfolio is broadly diversified across sectors and regions, aligning well with its growth profile.

Growth Info

Historically, this portfolio has shown a strong CAGR of 16.53%, indicating robust growth potential. However, it has also experienced a significant drawdown of -49.35%, highlighting its vulnerability to market downturns. The portfolio's performance is concentrated, with 90% of returns stemming from just 33 days. This suggests that while the portfolio has performed well in the past, it may be susceptible to volatility. Comparing to a benchmark like the S&P 500, this performance is commendable, but caution is advised due to potential risk exposure.

Projection Info

Using Monte Carlo simulations, which model potential future outcomes based on historical data, this portfolio shows promising prospects. The simulations indicate a 50th percentile return of 1,103.9% and a strong annualized return of 23.91% across all simulations. However, it's crucial to remember that these projections are based on past performance and assumptions, which do not guarantee future results. The high number of simulations with positive returns (982 out of 1,000) suggests a favorable outlook, but investors should remain aware of the inherent uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which aligns with its growth-focused strategy. While this can lead to higher returns, it also increases exposure to market volatility and risk. Compared to a benchmark, which might include bonds or other asset classes to balance risk, this portfolio is more aggressive. To enhance diversification and potentially reduce risk, consider including other asset classes like bonds or real estate, which can provide stability during market fluctuations.

Sectors Info

  • Technology
    42%
  • Financials
    22%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Health Care
    6%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, which comprises 42% of the total allocation. Financial services follow with 22%, while other sectors like consumer cyclicals and healthcare have smaller allocations. This tech-heavy composition can lead to higher returns during tech booms but may also result in increased volatility, especially during interest rate hikes. To mitigate sector-specific risks, consider diversifying further by increasing exposure to underrepresented sectors.

Regions Info

  • North America
    77%
  • Asia Emerging
    13%
  • Asia Developed
    5%
  • Africa/Middle East
    3%
  • Europe Developed
    2%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, accounting for 77% of its allocation. This provides stability due to the mature markets but limits exposure to potentially high-growth regions like Asia and Latin America. Emerging markets are represented by a 13% allocation in Asia, which adds some diversification. To further enhance geographic diversification, consider increasing exposure to developed and emerging markets outside North America, which can offer growth opportunities and reduce regional risk.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    37%
  • Mid-cap
    18%
  • Small-cap
    2%

The portfolio's market capitalization is primarily distributed across mega and big-cap stocks, which together make up 79% of the allocation. This focus on larger companies typically provides stability and lower volatility. However, medium and small-cap stocks, which account for 18% and 2% respectively, can offer higher growth potential. To capture more growth opportunities, consider increasing the allocation to smaller-cap stocks, which may enhance returns over time, albeit with increased 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 can potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation of current assets, you can find a combination that maximizes returns for a given level of risk. This doesn't necessarily mean adding new assets but rather reallocating existing ones. It's important to note that "efficiency" focuses on optimizing risk and return, not necessarily achieving maximum diversification or other specific investment goals.

Dividends Info

  • iShares U.S. Insurance ETF 0.90%
  • Schwab Emerging Markets Equity ETF 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Technology Select Sector SPDR® Fund 0.50%
  • Weighted yield (per year) 1.37%

With a total dividend yield of 1.37%, this portfolio offers moderate income potential. The Schwab Emerging Markets Equity ETF contributes the highest yield at 3.00%, while other holdings like the Vanguard S&P 500 ETF provide lower yields. Dividend income can be a valuable component of total returns, especially for growth-oriented investors seeking some income stability. To enhance dividend income, consider reallocating to higher-yielding stocks or ETFs, while balancing the need for growth.

Ongoing product costs Info

  • iShares U.S. Insurance ETF 0.40%
  • Schwab Emerging Markets Equity ETF 0.11%
  • Vanguard S&P 500 ETF 0.03%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is impressively low at 0.10%, which is beneficial for long-term performance. Lower costs mean more of your returns are retained, contributing positively to compounding growth over time. This aligns well with the portfolio's growth strategy and provides a cost advantage compared to higher-cost alternatives. Maintaining this low-cost structure is advisable, but it's also worth periodically reviewing fees to ensure they remain competitive as the portfolio evolves.

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