A high-growth portfolio with strong technology focus and limited geographic diversification

Report created on Dec 8, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a significant 30% allocation to the Vanguard Russell 1000 Growth Index Fund ETF Shares. It also includes 25% each in Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Growth ETF, 10% in Vanguard Total Stock Market Index Fund ETF Shares, and 5% each in Advanced Micro Devices Inc and Intel Corporation common stocks. This allocation shows a strong preference for growth-oriented assets. The focus on ETFs suggests an interest in broad market exposure while maintaining some individual stock positions for potential high returns. Consider diversifying further to mitigate potential risks associated with concentrated allocations.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 17.44%. However, it experienced a significant maximum drawdown of -47.49%, indicating vulnerability during market downturns. The performance is driven by a few key days, with 90% of returns occurring in just 36 days. This highlights the portfolio's sensitivity to market volatility. While past performance can provide insights, it doesn't guarantee future results. Regularly reviewing performance metrics can help in understanding the portfolio's risk-reward dynamics and making necessary adjustments.

Projection Info

Using Monte Carlo simulations, which involve running numerous hypothetical scenarios based on historical data, the portfolio projects an annualized return of 22.98%. The simulations suggest a wide range of potential outcomes, with the 5th percentile showing a 33.82% return and the 67th percentile a 1,486.41% return. While these projections offer a glimpse into possible future performance, they are based on historical data and assumptions that may not hold true. It's important to consider these results as one of many tools in assessing future potential, rather than definitive predictions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.92% in equities and a negligible 0.08% in cash. This allocation indicates a strong emphasis on capital appreciation, typical of growth-oriented strategies. However, the lack of diversification across asset classes may expose the portfolio to higher volatility and risk during market downturns. Introducing other asset classes, such as bonds or real estate, could provide stability and reduce overall risk. Balancing the portfolio with different types of investments can help achieve a more resilient financial strategy.

Sectors Info

  • Technology
    43%
  • Consumer Discretionary
    11%
  • Financials
    10%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio has a notable concentration in the technology sector, which accounts for 42.93% of the total allocation. Other sectors like consumer cyclicals, financial services, and healthcare have smaller yet significant allocations. The heavy reliance on technology could lead to higher volatility due to the sector's inherent fluctuations. While technology offers growth potential, it's important to balance the portfolio with exposure to other sectors to mitigate sector-specific risks. Diversifying across various industries can enhance resilience against market shifts and provide more consistent returns.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is overwhelmingly focused on North America, with 99.69% exposure. This limited geographic diversification may increase vulnerability to regional economic downturns or policy changes. While North American markets have been strong performers, expanding exposure to other regions could capture growth opportunities and reduce regional risk. Consider diversifying into emerging markets or other developed regions to enhance global exposure. A more balanced geographic allocation can help manage risks associated with specific regional events and economic cycles.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation

The portfolio's assets show high correlation, particularly among the Schwab U.S. Large-Cap Growth ETF, Vanguard Total Stock Market Index Fund ETF Shares, and Vanguard Russell 1000 Growth Index Fund ETF Shares. This correlation implies that these assets tend to move in tandem, which may limit diversification benefits. High correlation can lead to increased portfolio volatility during market downturns. To enhance diversification, consider reducing exposure to highly correlated assets and introducing investments with lower correlation. This approach can help manage risk and improve the portfolio's overall stability.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. However, before optimizing, it's crucial to address the high correlation among certain assets, which may limit diversification benefits. The Efficient Frontier analysis focuses on adjusting the allocation among existing assets to enhance efficiency. By reallocating investments to achieve a better risk-return balance, the portfolio can potentially improve performance. It's important to note that optimization is based solely on current assets and doesn't account for external factors or future market conditions.

Dividends Info

  • Intel Corporation 1.80%
  • Schwab U.S. Dividend Equity ETF 2.50%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.09%

The portfolio's overall dividend yield is 1.09%, with contributions from Intel Corporation, Schwab U.S. Dividend Equity ETF, and other holdings. While not a primary focus of the portfolio, dividends can provide a steady income stream and help cushion against market volatility. The Schwab U.S. Dividend Equity ETF, with a yield of 2.5%, plays a notable role in enhancing income. For investors seeking higher income, consider increasing allocations to higher-yielding assets or exploring dividend-focused strategies. Balancing growth and income can lead to a more well-rounded investment approach.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is relatively low at 0.05%, reflecting cost-efficient ETF choices. Low costs can significantly enhance long-term returns by minimizing the drag on performance. The Vanguard and Schwab ETFs contribute to this cost efficiency, with expense ratios ranging from 0.03% to 0.08%. While the current costs are favorable, it's important to regularly review and compare expenses across investment options. Maintaining a focus on cost-effective investments can help maximize returns and support the portfolio's growth objectives.

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