A highly diversified growth portfolio with a strong focus on technology and high dividend yields

Report created on Dec 8, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of ETFs, with a significant portion allocated to technology and dividend-focused funds. The largest holding is the Invesco NASDAQ 100 ETF, which constitutes over 12% of the portfolio. Other notable holdings include the SPDR S&P 500 ETF Trust and various Vanguard ETFs. The portfolio also contains a mix of individual stocks, such as Lockheed Martin and Duolingo. The diversity of asset types and sectors suggests a strategy aimed at balancing growth with income. This mix is important as it helps spread risk and provides potential for both capital appreciation and income through dividends.

Growth Info

Historically, this portfolio has achieved a compound annual growth rate (CAGR) of 10.64%, with a maximum drawdown of -27.25%. This indicates strong growth potential, although it has experienced significant volatility. The concentration of returns over a limited number of days highlights the importance of staying invested to capture these gains. While past performance is not a guarantee of future results, understanding these trends can help set realistic expectations. It may be beneficial to periodically review the portfolio to ensure it aligns with the investor's risk tolerance and performance goals.

Projection Info

The portfolio's future performance has been projected using Monte Carlo simulations, which estimate potential outcomes based on historical data. With an annualized return of 8.1% across simulations, the results suggest a wide range of possible outcomes, including significant downside risk. The 5th percentile simulation shows a potential loss of nearly 99%, underscoring the inherent uncertainty in market predictions. While these simulations provide valuable insights, they should be interpreted cautiously, as they rely on past market behavior and assumptions that may not hold in the future.

Asset classes Info

  • Stocks
    89%
  • Bonds
    8%
  • Real Estate
    2%

The portfolio is heavily weighted towards stocks, which make up nearly 89% of the allocation. Bonds account for about 8%, with real estate and cash making up the remainder. This allocation suggests a focus on growth, as equities typically offer higher returns but also come with greater volatility. Bonds and real estate can provide stability and income, acting as a buffer against market fluctuations. To enhance diversification, consider adjusting the balance between asset classes according to risk tolerance and investment goals, potentially increasing exposure to bonds or other asset classes.

Sectors Info

  • Technology
    30%
  • Industrials
    11%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    9%
  • Real Estate
    7%
  • Consumer Discretionary
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

Technology is the dominant sector in this portfolio, representing nearly 30% of the total allocation. Other significant sectors include industrials, communication services, and financial services. This concentration in technology suggests a growth-oriented strategy, given the sector's historical performance and potential for future innovation. However, this focus also increases vulnerability to sector-specific risks. To mitigate such risks, consider gradually increasing exposure to underrepresented sectors, like utilities or consumer staples, which can provide stability and consistent returns.

Regions Info

  • North America
    66%
  • Europe Developed
    12%
  • Asia Emerging
    4%
  • Japan
    3%
  • Asia Developed
    3%
  • No data
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily skewed towards North America, which accounts for over 66% of the allocation. Europe and various regions in Asia also have a presence, but to a lesser extent. This emphasis on North American assets reflects confidence in the region's economic stability and growth prospects. However, geographic concentration can expose the portfolio to regional economic downturns. Diversifying further into emerging markets or other regions could provide additional growth opportunities and reduce dependency on any single economic area.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF
    Fidelity® MSCI Information Technology Index ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    iShares Core S&P 500 ETF
    SPDR S&P 500 ETF Trust
    High correlation

The portfolio contains several highly correlated assets, particularly within the technology and large-cap equity ETFs. This correlation means these assets tend to move in tandem, which can amplify risks during market downturns. While some correlation is inevitable, excessive overlap may limit diversification benefits. To enhance risk management, consider reducing holdings in highly correlated assets and reallocating to those with lower correlation, which can help smooth returns and provide better protection against 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.

Optimization analysis suggests that the current portfolio could achieve a more efficient risk-return ratio by adjusting asset allocations. This involves focusing on the Efficient Frontier, which identifies the best possible return for a given level of risk. By reducing holdings in highly correlated assets and reallocating to those offering better diversification, the portfolio's efficiency can be improved. This doesn't necessarily mean changing the asset mix entirely but rather fine-tuning existing allocations to enhance performance.

Dividends Info

  • Vanguard Extended Duration Treasury Index Fund ETF Shares 4.00%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF 1.10%
  • Global X Video Games & Esports ETF 0.60%
  • iShares Core MSCI Emerging Markets ETF 2.70%
  • iShares Core 5-10 Year USD Bond ETF 3.90%
  • iShares Core S&P 500 ETF 1.20%
  • Lockheed Martin Corporation 1.80%
  • Invesco NASDAQ 100 ETF 0.60%
  • iShares Mortgage Real Estate Capped ETF 9.40%
  • Raytheon Technologies Corp 1.60%
  • Global X SuperDividend ETF 10.10%
  • SPDR S&P 500 ETF Trust 1.20%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 3.50%
  • Vanguard FTSE Europe Index Fund ETF Shares 3.00%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 2.00%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.50%
  • Weighted yield (per year) 2.02%

The portfolio has a total dividend yield of 2.02%, with notable contributions from high-yield ETFs like the Global X SuperDividend ETF and the iShares Mortgage Real Estate Capped ETF. Dividends provide a steady income stream, which can be particularly attractive during periods of market uncertainty. However, high dividend yields can sometimes indicate higher risks. It's crucial to balance the pursuit of income with the need for capital preservation. Reinvesting dividends can also enhance compounding returns over time.

Ongoing product costs Info

  • ARK Genomic Revolution ETF 0.75%
  • ARK Innovation ETF 0.75%
  • Vanguard Extended Duration Treasury Index Fund ETF Shares 0.06%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Goldman Sachs ActiveBeta® U.S. Large Cap Equity ETF 0.09%
  • Global X Video Games & Esports ETF 0.50%
  • iShares Core MSCI Emerging Markets ETF 0.09%
  • iShares Core 5-10 Year USD Bond ETF 0.06%
  • iShares Core S&P 500 ETF 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • iShares Mortgage Real Estate Capped ETF 0.48%
  • Global X SuperDividend ETF 0.58%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard FTSE Europe Index Fund ETF Shares 0.13%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 0.15%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, with higher costs associated with specific ETFs like the ARK Genomic Revolution ETF. While costs can erode returns over time, this TER is relatively low, indicating cost-efficiency. Keeping expenses in check is vital for maximizing long-term returns. Regularly reviewing and comparing fund expenses can help identify opportunities to reduce costs further, potentially through lower-cost alternatives or fee-negotiation with service providers.

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