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

Report created on Feb 27, 2025

Risk profile Info

5/7
Growth
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Diversification profile Info

2/5
Low Diversity
← Less diversification More diversification →

Positions

This portfolio is heavily weighted towards the Schwab S&P 500 Index Fund, which makes up 61.75% of the total. This fund is complemented by a significant allocation to NVIDIA Corporation at 19.72%, along with smaller positions in the First Trust NASDAQ Cybersecurity ETF and Palantir Technologies Inc. The Avantis U.S. Small Cap Value ETF rounds out the portfolio. The composition leans heavily on large-cap U.S. equities, limiting diversification. While the S&P 500 provides broad market exposure, the concentration in a few tech stocks may increase volatility. Balancing this concentration with more diverse holdings could enhance stability.

Growth Info

Historically, the portfolio has performed well, boasting a CAGR of 29.23%. This impressive growth is partly due to the strong performance of tech stocks like NVIDIA. However, the portfolio also experienced a significant maximum drawdown of -38.70%, indicating vulnerability during market downturns. The comparison to a benchmark like the S&P 500, which typically has lower volatility, highlights the portfolio's higher risk profile. While past performance is no guarantee of future results, the historical data suggests potential for high returns with increased risk. Investors should be prepared for both strong growth and potential setbacks.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a 50th percentile end value of 6,598.5% and a 67th percentile value of 15,263.1%. Monte Carlo simulations use historical data to estimate future returns, but they are not foolproof predictors. The high annualized return of 49.25% across simulations suggests strong growth potential, but the variability in outcomes underscores the inherent uncertainty. Investors should consider these projections as one of many tools to guide decision-making, understanding the limitations of relying solely on historical data for future predictions.

Asset classes Info

  • Stocks
    100%

The portfolio is 100% invested in stocks, which can lead to substantial growth but also exposes it to higher volatility. The lack of diversification into other asset classes such as bonds or cash may increase risk, especially during market downturns. A well-diversified portfolio typically includes a mix of asset classes to balance risk and return. While the current allocation aligns with a growth-focused strategy, incorporating other asset classes could provide a buffer against market fluctuations and enhance overall portfolio resilience.

Sectors Info

  • Technology
    55%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Telecommunications
    6%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology dominates the portfolio, accounting for 55% of the sector allocation. This concentration reflects a bet on tech's continued growth but also increases vulnerability to sector-specific downturns. Other sectors like Financial Services, Consumer Cyclical, and Healthcare have minor allocations. While tech has driven recent market gains, it is also sensitive to interest rate changes and regulatory shifts. Diversifying into more sectors could reduce risk and capture opportunities across different economic cycles. Balancing sector exposure can help mitigate the impact of adverse events within any single sector.

Regions Info

  • North America
    98%
  • Asien Schwellenländer
    1%
  • Europe Developed
    1%

The portfolio is overwhelmingly concentrated in North America, with 98% of assets allocated there. This geographic concentration limits exposure to international markets, which could provide diversification benefits. While the U.S. market has been a strong performer, global diversification can help mitigate risks associated with regional economic downturns or geopolitical events. Expanding geographic exposure to include developed and emerging markets could enhance diversification and potentially capture growth opportunities outside the U.S., aligning the portfolio more closely with global benchmarks.

Market capitalization Info

  • Mega-cap
    56%
  • Large-cap
    26%
  • Mid-cap
    15%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is heavily weighted towards mega-cap stocks, which make up 56% of the allocation, followed by big-cap stocks at 26%. This focus on larger companies provides stability but may limit exposure to the potentially higher growth of small and mid-cap stocks. Smaller companies often offer greater growth potential, albeit with higher risk. Balancing the market capitalization exposure could enhance overall portfolio returns by capturing growth from smaller, more dynamic companies while maintaining the stability provided by large-cap stocks.

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 seeks the best possible risk-return ratio based on current assets. This optimization involves adjusting the allocation among existing holdings to maximize returns for a given level of risk. While the portfolio is growth-focused, fine-tuning the balance between risk and return could enhance performance. However, it's important to note that such optimization is based on historical data, and the future may present different challenges and opportunities that could affect outcomes.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.70%
  • First Trust NASDAQ Cybersecurity ETF 0.30%
  • Schwab S&P 500 Index Fund 1.20%
  • Weighted yield (per year) 0.81%

The portfolio's dividend yield is relatively low at 0.81%, reflecting its growth-oriented focus. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. While growth stocks like those in this portfolio typically reinvest earnings to fuel expansion, incorporating dividend-paying stocks could enhance income and stability. Balancing growth with income-generating assets can create a more resilient portfolio, particularly for investors seeking regular cash flow alongside capital appreciation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • Schwab S&P 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, primarily due to the Schwab S&P 500 Index Fund's minimal costs. Keeping costs low is crucial for long-term performance, as fees can erode returns over time. The low TER is a positive aspect, ensuring more of the portfolio's returns are retained by the investor. While cost efficiency is commendable, investors should also consider the potential benefits of higher-cost funds if they offer unique diversification or growth opportunities that align with investment goals.

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