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A growth-focused portfolio with heavy technology weighting and moderate diversification

Report created on Jan 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists primarily of ETFs, with significant allocations to technology-focused funds. The VanEck Semiconductor ETF and Vanguard S&P 500 ETF each hold 30% of the portfolio, indicating a strong emphasis on growth sectors. Compared to typical diversified portfolios, this structure leans heavily towards technology and large-cap U.S. equities. While this allocation supports growth, it may expose the portfolio to sector-specific risks. To enhance diversification, consider incorporating assets from other sectors or asset classes that are less correlated with technology stocks.

Growth Info

The portfolio has demonstrated impressive historical performance, with a compound annual growth rate (CAGR) of 19.97%. However, it also experienced a maximum drawdown of -37.14%, indicating significant volatility. While past performance suggests strong growth potential, it's important to remember that historical data doesn't guarantee future results. Investors should be prepared for periods of high volatility, especially given the portfolio's concentrated sector exposure. To mitigate risk, consider strategies like rebalancing or diversifying into less volatile asset classes.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a median return of 991.6%. Monte Carlo simulations use historical data to model various future scenarios, providing insights into potential risks and returns. While the projections are optimistic, they are based on past trends and assumptions, which may not hold in the future. Given the uncertainty, it's wise to regularly review the portfolio's alignment with personal risk tolerance and financial goals, adjusting allocations as needed.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with over 99% in equities and minimal cash holdings. This allocation aligns with a growth-oriented strategy but may lack the stability that comes from diversifying across different asset classes like bonds or real estate. Compared to a balanced portfolio, this one is more susceptible to market fluctuations. To enhance resilience, consider adding non-equity asset classes that can provide steady income or act as a hedge during market downturns.

Sectors Info

  • Technology
    65%
  • Consumer Discretionary
    6%
  • Telecommunications
    6%
  • Financials
    6%
  • Health Care
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Technology dominates the sector allocation, comprising nearly 65% of the portfolio. While this concentration can drive growth, it also increases exposure to sector-specific risks, such as regulatory changes or technological disruptions. This allocation differs significantly from more balanced benchmarks, which typically feature a broader sector mix. To reduce risk, consider gradually increasing exposure to underrepresented sectors, which could offer diversification benefits and mitigate potential losses during technology sector downturns.

Regions Info

  • North America
    90%
  • Asia Developed
    5%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%

The portfolio is primarily invested in North American assets, which account for nearly 90% of the geographic allocation. This concentration limits exposure to international markets, potentially reducing diversification benefits. Compared to global benchmarks, this portfolio is underexposed to emerging markets, which might offer growth opportunities and risk diversification. To enhance geographic diversification, consider increasing allocations to regions like Asia or Europe, which can provide exposure to different economic cycles and growth drivers.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Invesco QQQ Trust
    High correlation
  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, particularly within technology-focused ETFs like the Vanguard Information Technology Index Fund and Invesco QQQ Trust. High correlation means these assets often move in tandem, potentially limiting diversification benefits during market downturns. While these ETFs can enhance growth, they may not offer much risk reduction. To improve diversification, consider incorporating assets with lower correlation to existing holdings, which can help cushion the portfolio against sector-specific volatility.

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.

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The portfolio can potentially be optimized using the Efficient Frontier, which helps find the best risk-return ratio given the current assets. However, the presence of highly correlated assets suggests a need for rebalancing before optimization. By reducing overlap and increasing diversification, the portfolio can achieve a more efficient risk-return profile. This approach focuses on maximizing returns for a given level of risk, enhancing overall portfolio performance without necessarily adding new asset classes.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Weighted yield (per year) 0.89%

The portfolio's dividend yield is relatively low at 0.89%, reflecting its growth orientation. While dividends can provide a steady income stream, growth-focused portfolios often prioritize capital appreciation over income. For investors seeking higher income, consider adding dividend-focused assets, which can complement the growth strategy and provide some stability during market fluctuations. Balancing growth with income can help achieve a more well-rounded portfolio suited to long-term financial goals.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is low and favorable for long-term returns. Lower costs mean more of your money remains invested, compounding over time. This cost efficiency aligns well with best practices for maximizing investment growth. While costs are well-managed, it's still beneficial to periodically review fees and explore potentially lower-cost alternatives to ensure the portfolio remains optimized for cost-effectiveness and performance.

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