A growth-oriented portfolio with a strong focus on U.S. equities and technology sector

Report created on Dec 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards U.S. equities, with significant allocations in ETFs like the Vanguard S&P 500 and Avantis U.S. Small Cap Value. It also includes individual stocks like NVIDIA. The structure is typical for a growth-focused portfolio, aiming for capital appreciation. Compared to a typical balanced portfolio, this allocation leans towards equities, indicating a higher risk tolerance. It lacks exposure to fixed income assets, which could add stability. Consider balancing with bonds or other fixed income assets to reduce volatility, especially during market downturns.

Growth Info

The portfolio's historical performance shows a strong CAGR of 24.27%, which is impressive and suggests robust past growth. However, the max drawdown of -30.64% indicates significant risk during downturns. This performance outpaces many benchmarks, but it's important to remember that past performance doesn't guarantee future results. To mitigate potential losses, diversifying into less volatile asset classes like bonds could be beneficial. This would help in cushioning the portfolio during market corrections, although it might slightly reduce the overall growth rate.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns. The median projection shows significant growth, but the range highlights uncertainty. With a 50th percentile of 1,448.48% and a 5th percentile of 200.83%, there's potential for both high returns and substantial risk. These projections are not guarantees but can guide expectations. Consider stress-testing the portfolio against various economic scenarios to understand potential vulnerabilities and adjust allocations accordingly.

Asset classes Info

  • Stocks
    95%
  • Other
    5%

The portfolio is predominantly composed of stocks, accounting for over 94% of its allocation. This heavy stock weighting supports growth but increases exposure to market volatility. Compared to a more balanced allocation, this setup lacks fixed income, which could provide stability. Introducing bonds or real estate could enhance diversification and reduce risk. This would create a more balanced risk-return profile, especially beneficial during periods of market stress, without significantly sacrificing growth potential.

Sectors Info

  • Technology
    34%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    6%
  • Energy
    6%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in technology, comprising over 34% of the allocation. This aligns with growth objectives but may increase sensitivity to tech sector volatility. Other sectors like financial services and consumer cyclicals are also represented. Compared to a broad market index, this concentration can lead to higher volatility if the tech sector underperforms. Consider diversifying into sectors like healthcare or utilities, which historically offer stability and can offset tech sector risks, enhancing overall portfolio resilience.

Regions Info

  • North America
    88%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising over 87% of the allocation. This concentration limits exposure to international markets, which could offer diversification benefits. Compared to global benchmarks, this allocation is less diversified. Increasing exposure to emerging markets or developed regions outside North America could reduce geographic risk and provide growth opportunities. Global diversification can help mitigate regional economic downturns and tap into growth in other parts of the world.

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 current asset allocation could be optimized using the Efficient Frontier, which balances risk and return. The portfolio's risk-return ratio can be improved by adjusting allocations, potentially enhancing returns without increasing risk. However, this optimization is based solely on current assets and doesn't account for external factors like market conditions. Regularly reviewing the portfolio in light of changing market dynamics can help maintain an optimal risk-return balance, ensuring alignment with investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 0.94%

The portfolio's dividend yield is relatively low at 0.94%, reflecting its growth focus. While dividends contribute to total returns, this portfolio prioritizes capital appreciation. For income-focused investors, this yield might be insufficient. Consider adding dividend-focused ETFs or stocks to increase income generation. Balancing growth and income can provide more consistent cash flow, appealing to investors seeking both capital growth and regular income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR® Gold Shares 0.40%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is low at 0.12%, which is favorable for long-term growth. Low costs mean more of your money stays invested, compounding over time. This is a strong aspect of the portfolio, aligning with best practices for cost efficiency. Regularly reviewing and comparing fund fees to ensure they remain competitive can help maintain this advantage. Consider replacing any high-cost funds with lower-cost alternatives to further enhance net returns.

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