A growth-focused portfolio with strong US equity concentration and low diversification

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.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a high risk tolerance and a focus on aggressive growth. Ideal for those with a long-term investment horizon, it prioritizes capital appreciation over income. Such investors are typically comfortable with market volatility and are willing to withstand short-term fluctuations for potential long-term gains. The portfolio's concentration in equities and low diversification means it's best for those who can afford to take on additional risk in pursuit of higher returns.

Positions

  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    50.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    25.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    25.00%

The portfolio is heavily weighted towards equity ETFs, with 50% in the Invesco S&P 500® Momentum ETF, 25% in the Schwab U.S. Dividend Equity ETF, and 25% in the Vanguard Total Stock Market Index Fund ETF Shares. This composition indicates a strong focus on US equities with limited diversification across asset classes. Compared to common benchmark compositions, this portfolio lacks exposure to bonds or alternative investments, which are typically included to mitigate risk. To improve diversification, consider incorporating bond ETFs or international equities to balance the risk-reward profile.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a CAGR of 18.68%. This suggests a robust growth trajectory when compared to typical market benchmarks like the S&P 500. However, the portfolio also experienced a significant maximum drawdown of -32.37%, highlighting potential volatility. While past performance can be indicative of trends, it's crucial to remember that it doesn't guarantee future results. To better manage risk, consider strategies like dollar-cost averaging or setting aside a cash reserve to weather downturns.

Projection Info

Forward projections using Monte Carlo simulations show a favorable outlook, with an annualized return of 19.81% across 1,000 simulations. The portfolio has a high likelihood of positive returns, with 999 simulations yielding gains. Monte Carlo simulations use historical data to predict potential outcomes, but they are not foolproof and should be taken as estimates rather than certainties. It's wise to regularly review and adjust the portfolio as market conditions evolve to align with these projections.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio's allocation is almost entirely in stocks, with a negligible 0.32% in cash. This high concentration in equities suggests a strong growth orientation but also exposes the portfolio to higher market volatility. Compared to more balanced portfolios, this one lacks diversification across asset classes like bonds or real estate, which can provide stability during market fluctuations. To mitigate risk, consider diversifying into other asset classes that might offer more consistent returns during periods of market uncertainty.

Sectors Info

  • Technology
    22%
  • Financials
    20%
  • Consumer Discretionary
    12%
  • Health Care
    11%
  • Industrials
    10%
  • Consumer Staples
    8%
  • Telecommunications
    8%
  • Energy
    5%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Sector allocation reveals a significant focus on technology and financial services, comprising over 40% of the portfolio. This concentration aligns with current market trends but may increase exposure to sector-specific risks, such as regulatory changes or interest rate fluctuations. While the portfolio benefits from participation in high-growth sectors, it might be prudent to explore opportunities in underrepresented sectors to enhance diversification and reduce potential volatility.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

The portfolio is heavily concentrated in North American assets, accounting for over 99% of the allocation. This limited geographic diversification may expose the portfolio to region-specific risks, such as economic downturns or policy changes in the US. While North American markets have been strong performers, considering investments in international markets could provide additional growth opportunities and reduce reliance on a single region. A more globally diversified portfolio can help balance risks and tap into emerging market growth.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.70%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.50%

The portfolio's dividend yield is modest at 1.5%, with the Schwab U.S. Dividend Equity ETF contributing the most at 3.7%. Dividends can provide a steady income stream, which is particularly beneficial during volatile market periods. For investors seeking income alongside growth, focusing on high-dividend-paying assets might enhance the portfolio's overall yield. However, it's essential to balance the pursuit of dividends with the potential for capital appreciation to meet long-term growth objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio boasts a low Total Expense Ratio (TER) of 0.09%, which is advantageous for long-term performance. Lower costs mean more of your investment returns are retained, compounding over time. This cost efficiency aligns well with best practices in portfolio management, ensuring that fees do not erode returns. While the current costs are commendable, it's always beneficial to periodically review them to ensure they remain competitive, particularly if considering new investment vehicles.

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.

Considering the Efficient Frontier, the portfolio could potentially be optimized for a better risk-return balance. The Efficient Frontier represents the set of optimal portfolios that offer the highest expected return for a defined level of risk. By adjusting the allocation among current assets, it's possible to improve the portfolio's efficiency. This doesn't necessarily mean adding new assets but rather reallocating existing ones to achieve a more desirable risk-return ratio. Regular reviews can help maintain this balance as market conditions change.

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