A growth-focused portfolio with tech-heavy exposure and limited geographic diversification

Report created on Jan 1, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio comprises primarily of ETFs, with a significant 40% allocation to the iShares Core S&P 500 ETF, and a 35% allocation to the Vanguard Information Technology Index Fund ETF Shares. This composition leans heavily towards U.S. equities, particularly in the technology sector. In comparison to a balanced benchmark, this portfolio is heavily skewed towards equities, especially technology. This structure suggests a focus on growth, but it may lack the diversification typically seen in more balanced portfolios. Consider diversifying into other asset classes to reduce risk and enhance stability.

Growth Info

Historically, the portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 18%, indicating strong returns over time. However, it's important to note the maximum drawdown of -31.46%, which reflects significant potential losses during downturns. Compared to benchmarks, this performance suggests a high-risk, high-reward strategy. While past performance is promising, it doesn't guarantee future results. Investors should be prepared for volatility and consider whether this aligns with their risk tolerance and investment goals.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a median expected return of 626.5%. The simulations, which use historical data to predict future performance, show that 993 out of 1,000 scenarios yield positive returns. However, the 5th percentile outcome is 97.95%, highlighting the uncertainty involved. While these projections offer insights, they are based on past data and assumptions, which may not hold true in the future. It's crucial to regularly reassess the portfolio's alignment with personal financial goals and risk tolerance.

Asset classes Info

  • Stocks
    95%
  • Other
    5%

The portfolio is heavily weighted towards stocks, comprising 94.6% of the total allocation, with a small 5% allocation to other assets, like gold. This concentration in equities suggests a focus on capital appreciation, but it may lack the stability provided by a more diversified asset class mix. In comparison to a diversified benchmark, this allocation is quite aggressive. Consider incorporating fixed-income or alternative investments to balance risk and potentially enhance returns during market volatility.

Sectors Info

  • Technology
    55%
  • Financials
    8%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Health Care
    6%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is predominantly concentrated in the technology sector, which makes up 55.5% of the total allocation. This heavy tech focus can lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. Other sectors, like financial services and consumer cyclicals, have modest representations. While a tech-heavy portfolio can capitalize on growth trends, it may benefit from increased exposure to underrepresented sectors to enhance diversification and reduce sector-specific risks.

Regions Info

  • North America
    91%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 91% exposure. This limited geographic diversification may expose the portfolio to regional economic and political risks. Compared to a global benchmark, this allocation is quite narrow. Expanding exposure to emerging markets or other developed regions could provide better diversification and potential growth opportunities. Consider rebalancing to include a broader range of geographic regions to mitigate risks associated with regional concentration.

Redundant positions Info

  • Vanguard Growth Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    iShares Core S&P 500 ETF
    High correlation

The portfolio's assets are highly correlated, particularly among the Vanguard Growth Index Fund, Vanguard Total World Stock Index Fund, and iShares Core S&P 500 ETF. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. While correlated assets can enhance returns in rising markets, they may also amplify losses in downturns. Consider diversifying into less correlated asset classes or sectors to improve risk management and enhance portfolio resilience.

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 potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. Currently, some assets are highly correlated, which limits diversification benefits. By adjusting the allocation among existing assets, the portfolio could potentially achieve a more efficient balance. This involves finding the optimal mix of risk and return based on current holdings. Regularly reviewing and rebalancing the portfolio can help maintain alignment with personal financial goals while optimizing performance.

Dividends Info

  • iShares Core S&P 500 ETF 0.90%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.82%

The portfolio's dividend yield is relatively low at 0.82%, reflecting its growth-focused nature. Dividends can provide a steady income stream, but this portfolio prioritizes capital appreciation over income generation. Compared to income-focused portfolios, the dividend yield here is modest. If income is a priority, consider reallocating some assets to higher-yielding investments. However, if growth remains the primary goal, maintaining the current allocation may be suitable, as long as it aligns with overall financial objectives.

Ongoing product costs Info

  • SPDR Gold MiniShares 0.10%
  • iShares Core S&P 500 ETF 0.03%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. Low fees are beneficial as they allow more of the portfolio's returns to be retained by the investor. Compared to industry averages, this TER is very competitive. Maintaining low costs is a positive aspect of the portfolio, and it's advisable to continue monitoring expense ratios to ensure they remain favorable. Consider reviewing periodically to identify potential cost-saving opportunities without compromising quality.

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