A growth-focused portfolio with strong U.S. exposure and moderate diversification potential

Report created on Feb 16, 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 is heavily weighted towards U.S. large-cap stocks, with 70% of assets split between growth and value ETFs. This focus aligns with a growth-oriented strategy, offering potential for significant capital appreciation. However, it limits exposure to international markets and alternative asset classes. A more balanced approach could include greater international diversification or alternative asset classes like bonds for risk mitigation. This allocation aligns with a growth profile but may not fully leverage diversification benefits.

Growth Info

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 14.05%. This indicates a strong growth trajectory, outperforming many benchmarks. However, the maximum drawdown of -35.50% highlights potential volatility. Such performance metrics suggest a portfolio geared towards capital growth, albeit with significant exposure to market downturns. Investors should consider their risk tolerance against historical volatility when evaluating long-term suitability.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a wide range of potential returns. With a 50th percentile projection of 331.7% and an annualized return of 12.75%, the outlook is optimistic. However, it's crucial to remember that these are simulations based on past data, which may not predict future market conditions. Investors should remain cautious and consider these projections as one of many tools in decision-making.

Asset classes Info

  • Stocks
    100%

The portfolio's 100% allocation to stocks indicates a strong growth orientation but lacks diversification across asset classes. While stocks can provide high returns, they also carry higher risk, especially during market downturns. Introducing bonds or other asset classes could enhance stability and reduce risk. This singular focus may appeal to aggressive investors but could be risky for those seeking more balanced exposure.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    11%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    3%

The portfolio's sector allocation is tech-heavy, with 27% invested in technology. This concentration may lead to higher volatility, especially during interest rate hikes or tech sector downturns. Other sectors like financial services and consumer cyclicals provide some balance, but diversification could be improved. Investors might consider adjusting sector weights to mitigate risk and align with broader market trends.

Regions Info

  • North America
    90%
  • Europe Developed
    6%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With 90% of assets in North America, the portfolio exhibits limited geographic diversification. This concentration may expose it to region-specific risks, such as economic downturns or policy changes in the U.S. Increasing exposure to emerging markets or other developed regions could enhance diversification. Such adjustments might provide a buffer against localized market volatility and offer growth opportunities abroad.

Market capitalization Info

  • Mega-cap
    35%
  • Large-cap
    28%
  • Mid-cap
    21%
  • Small-cap
    13%
  • Micro-cap
    3%

The portfolio's market capitalization distribution is skewed towards mega and big-cap stocks, comprising 63% of assets. This focus on larger companies may offer stability but limit exposure to potentially higher-growth small and micro-cap stocks. A more balanced market cap distribution could enhance growth potential while maintaining stability. Investors should weigh the benefits of stability against the desire for higher returns from smaller companies.

Redundant positions Info

  • Schwab U.S. Small-Cap ETF
    Schwab U.S. Mid-Cap ETF
    High correlation

The portfolio features highly correlated assets, particularly between the Schwab U.S. Small-Cap and Mid-Cap ETFs. High correlation means these assets often move together, reducing diversification benefits. To enhance diversification, investors might consider replacing one with a less correlated asset. This adjustment could improve risk management by spreading exposure across different market behaviors.

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 risk-return balance. However, optimization might require adjusting asset weights or introducing new assets to achieve this balance. Investors should focus on diversification and risk management to ensure the portfolio aligns with their risk tolerance and return objectives. This approach can enhance returns without significantly increasing risk.

Dividends Info

  • Schwab U.S. Small-Cap ETF 1.80%
  • Schwab International Equity ETF 1.80%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. Mid-Cap ETF 1.60%
  • Schwab U.S. Large-Cap Value ETF 2.50%
  • Weighted yield (per year) 1.43%

The portfolio's overall dividend yield is 1.43%, with the Schwab U.S. Large-Cap Value ETF providing the highest yield at 2.50%. While dividends offer a steady income stream, the portfolio's growth focus suggests capital appreciation is the primary goal. Investors seeking income might consider increasing allocations to higher-yielding assets. Balancing growth and income can provide a more comprehensive return strategy.

Ongoing product costs Info

  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Mid-Cap ETF 0.04%
  • Schwab U.S. Large-Cap Value ETF 0.04%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, minimizing costs and enhancing net returns. Low costs are a significant advantage, allowing more of the portfolio's growth to benefit the investor. Maintaining this cost efficiency is crucial for long-term success. Investors should continue monitoring fees to ensure they remain competitive and do not erode returns over time.

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