A technology-focused portfolio with high concentration in US equities and limited geographic diversification

Report created on Jan 13, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is heavily weighted towards common stocks, particularly in the technology sector, with Apple and Microsoft alone comprising over 40% of the total allocation. This concentration is higher than typical benchmarks, which often aim for a more balanced distribution across sectors and asset types. The portfolio also includes a mix of ETFs and a small percentage in bonds and cash. For improved diversification, consider reducing the reliance on a few tech stocks and increasing exposure to other sectors and asset classes.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 21.97%, indicating strong growth. However, the maximum drawdown of -11.08% highlights potential volatility. Comparatively, the S&P 500 has a lower historical CAGR but also less volatility. While past performance is not a guarantee of future results, this track record suggests a high-growth strategy. To mitigate risk, consider incorporating more defensive assets that can stabilize returns during market downturns.

Projection Info

Using Monte Carlo simulations, the forward projection shows a wide range of potential outcomes, with the 5th percentile at -27.79% and the 50th percentile at 365.52%. These projections are based on historical data and assume similar market conditions in the future, which might not always hold true. The simulations highlight the portfolio's potential for both significant gains and losses. To manage expectations, regularly review and adjust the asset allocation to align with your risk tolerance and investment goals.

Asset classes Info

  • Stocks
    91%
  • Bonds
    4%
  • Cash
    1%
  • Other
    1%

The portfolio's asset allocation is heavily skewed towards stocks, making up over 91% of the total, which is significantly higher than the typical balanced benchmark. Bonds and cash are underrepresented, which can limit the portfolio's ability to withstand market volatility. To enhance diversification, consider increasing the allocation to bonds and other asset classes that typically offer more stability and income.

Sectors Info

  • Technology
    47%
  • Financials
    19%
  • Consumer Discretionary
    12%
  • Consumer Staples
    2%
  • Industrials
    2%
  • Utilities
    2%
  • Telecommunications
    2%
  • Health Care
    1%
  • Basic Materials
    1%

Technology dominates the sectoral allocation at nearly 48%, which is much higher than common benchmarks. This concentration exposes the portfolio to sector-specific risks, such as regulatory changes or technological disruptions. While tech stocks have driven recent growth, consider diversifying into other sectors like healthcare or consumer staples, which can provide more balanced exposure and reduce sector-specific volatility.

Regions Info

  • North America
    88%
  • Europe Developed
    1%
  • Asia Emerging
    1%

The portfolio's geographic exposure is overwhelmingly in North America, accounting for nearly 88% of the total. This concentration limits diversification benefits and exposes the portfolio to regional economic and political risks. Common benchmarks often include more international exposure. To mitigate these risks, consider increasing allocations to developed and emerging markets outside North America.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Value Index Fund ETF Shares
    O’Shares U.S. Quality Dividend ETF
    SPDR S&P 500 ETF Trust
    SPDR Dow Jones Industrial Average ETF Trust
    Schwab U.S. Dividend Equity ETF
    Avantis All Equity Markets ETF
    Vanguard Total World Stock Index Fund ETF Shares
    WisdomTree U.S. Quality Dividend Growth Fund
    iShares Core S&P 500 ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation
  • SPDR Portfolio Corporate Bond
    Vanguard Total Bond Market Index Fund ETF Shares
    SPDR Portfolio Intermediate Term Treasury
    High correlation
  • Vanguard Utilities Index Fund ETF Shares
    Utilities Select Sector SPDR® Fund
    iShares U.S. Utilities ETF
    High correlation
  • iShares TIPS Bond ETF
    Schwab U.S. TIPS ETF
    High correlation
  • VanEck Semiconductor ETF
    iShares Semiconductor ETF
    High correlation
  • iPath® Series B S&P 500® VIX Short-Term Futures ETN
    ProShares Ultra VIX Short-Term Futures ETF
    2x Long VIX Futures ETF
    ProShares Short VIX Short-Term Futures ETF
    High correlation
  • Vanguard Consumer Staples Index Fund ETF Shares
    Consumer Staples Select Sector SPDR® Fund
    High correlation
  • Technology Select Sector SPDR® Fund
    Vanguard Information Technology Index Fund ETF Shares
    High correlation

The portfolio contains several highly correlated assets, particularly among large-cap US equity ETFs. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this could lead to larger losses. To improve diversification, consider replacing some of these assets with less correlated investments, such as international equities or alternative asset classes.

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 be optimized using the Efficient Frontier, which suggests a more efficient allocation could achieve an expected return of 5.01% with a lower risk level. This involves adjusting the current asset mix to improve the risk-return ratio. While this optimization focuses on existing assets, it may not address diversification goals. Regularly review and adjust the portfolio to ensure it aligns with your broader investment strategy.

Dividends Info

  • Apple Inc 0.40%
  • Avantis All Equity Markets ETF 0.90%
  • Broadcom Inc 1.00%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • WisdomTree U.S. Quality Dividend Growth Fund 1.60%
  • SPDR Dow Jones Industrial Average ETF Trust 1.60%
  • iShares MSCI EAFE ETF 3.30%
  • First Trust Nasdaq Food & Beverage ETF 2.90%
  • Goldman Sachs Access Treasury 0-1 Year ETF 4.20%
  • Alphabet Inc Class C 0.30%
  • iShares Global Clean Energy ETF 0.90%
  • iShares U.S. Utilities ETF 2.30%
  • Quadratic Interest Rate Volatility and Inflation Hedge ETF New 3.20%
  • iShares Core S&P 500 ETF 1.30%
  • Lockheed Martin Corporation 2.70%
  • Mastercard Inc 0.40%
  • Microsoft Corporation 0.70%
  • ProShares S&P 500 Dividend Aristocrats ETF 2.10%
  • Northrop Grumman Corporation 1.80%
  • O’Shares U.S. Quality Dividend ETF 1.40%
  • Invesco Dynamic Food & Beverage ETF 1.10%
  • Invesco Water Resources ETF 0.30%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Schwab U.S. TIPS ETF 2.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • iShares Short Treasury Bond ETF 5.00%
  • VanEck Semiconductor ETF 0.40%
  • iShares Semiconductor ETF 0.50%
  • SPDR Portfolio Corporate Bond 4.50%
  • Invesco S&P 500® High Dividend Low Volatility ETF 3.50%
  • Invesco S&P 500® Low Volatility ETF 1.60%
  • SPDR Portfolio Intermediate Term Treasury 3.20%
  • SPDR S&P 500 ETF Trust 0.90%
  • Amplify BlackSwan Growth & Treasury Core ETF 1.80%
  • First Trust NASDAQ Technology Dividend Index Fund 1.60%
  • iShares TIPS Bond ETF 2.40%
  • Taiwan Semiconductor Manufacturing 1.10%
  • WisdomTree Floating Rate Treasury Fund 4.40%
  • Visa Inc. Class A 0.70%
  • Vanguard Materials Index Fund ETF Shares 1.30%
  • Vanguard Consumer Staples Index Fund ETF Shares 1.80%
  • Vanguard Financials Index Fund ETF Shares 1.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Utilities Index Fund ETF Shares 3.00%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 2.70%
  • Vanguard Value Index Fund ETF Shares 1.70%
  • Industrial Select Sector SPDR® Fund 0.90%
  • Technology Select Sector SPDR® Fund 0.50%
  • Consumer Staples Select Sector SPDR® Fund 2.10%
  • Utilities Select Sector SPDR® Fund 3.00%
  • Health Care Select Sector SPDR® Fund 1.20%
  • Weighted yield (per year) 0.68%

The portfolio's dividend yield is relatively low at 0.68%, which reflects its growth-oriented focus. For investors seeking income, this may not be sufficient. Dividends can provide a steady income stream and reduce reliance on capital appreciation. To increase yield, consider adding higher-dividend-paying stocks or dividend-focused ETFs, which can offer both income and potential for capital growth.

Ongoing product costs Info

  • Avantis All Equity Markets ETF 0.23%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • WisdomTree U.S. Quality Dividend Growth Fund 0.28%
  • SPDR Dow Jones Industrial Average ETF Trust 0.16%
  • iShares MSCI EAFE ETF 0.33%
  • VanEck Video Gaming and eSports ETF 0.56%
  • First Trust Nasdaq Food & Beverage ETF 0.60%
  • Goldman Sachs Access Treasury 0-1 Year ETF 0.12%
  • SPDR® Gold Shares 0.40%
  • abrdn Physical Precious Metals Basket Shares ETF 0.60%
  • iShares Global Clean Energy ETF 0.41%
  • iShares U.S. Utilities ETF 0.40%
  • Quadratic Interest Rate Volatility and Inflation Hedge ETF New 1.03%
  • iShares Core S&P 500 ETF 0.03%
  • ProShares S&P 500 Dividend Aristocrats ETF 0.35%
  • O’Shares U.S. Quality Dividend ETF 0.48%
  • Invesco Dynamic Food & Beverage ETF 0.57%
  • Invesco Water Resources ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. TIPS ETF 0.03%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • iShares Short Treasury Bond ETF 0.15%
  • First Trust Cloud Computing ETF 0.60%
  • VanEck Semiconductor ETF 0.35%
  • iShares Semiconductor ETF 0.35%
  • SPDR Portfolio Corporate Bond 0.03%
  • Invesco S&P 500® High Dividend Low Volatility ETF 0.30%
  • Invesco S&P 500® Low Volatility ETF 0.25%
  • SPDR Portfolio Intermediate Term Treasury 0.03%
  • SPDR S&P 500 ETF Trust 0.10%
  • ProShares Short VIX Short-Term Futures ETF 0.95%
  • Amplify BlackSwan Growth & Treasury Core ETF 0.49%
  • First Trust NASDAQ Technology Dividend Index Fund 0.50%
  • iShares TIPS Bond ETF 0.19%
  • WisdomTree Floating Rate Treasury Fund 0.15%
  • 2x Long VIX Futures ETF 1.77%
  • ProShares Ultra VIX Short-Term Futures ETF 0.95%
  • Vanguard Materials Index Fund ETF Shares 0.10%
  • Vanguard Consumer Staples Index Fund ETF Shares 0.10%
  • Vanguard Financials Index Fund ETF Shares 0.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Utilities Index Fund ETF Shares 0.10%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 0.04%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • iPath® Series B S&P 500® VIX Short-Term Futures ETN 0.89%
  • Industrial Select Sector SPDR® Fund 0.09%
  • Technology Select Sector SPDR® Fund 0.09%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Utilities Select Sector SPDR® Fund 0.09%
  • Health Care Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.09%

The portfolio's Total Expense Ratio (TER) is 0.09%, which is quite low and supports better long-term performance by minimizing costs. However, some individual ETFs have higher expense ratios, such as the Quadratic Interest Rate Volatility and Inflation Hedge ETF at 1.03%. To further reduce costs, consider replacing high-fee ETFs with lower-cost alternatives that offer similar exposure.

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