A tech-heavy growth-focused portfolio with a notable tilt towards North American equities

Report created on Dec 28, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards ETFs, with significant allocations to the Vanguard S&P 500 ETF and Vanguard Growth Index Fund ETF Shares. The portfolio's structure indicates a strong emphasis on growth, with a focus on large-cap U.S. equities. Compared to common benchmarks like the S&P 500, the portfolio is more concentrated in specific growth-oriented funds. This composition reflects a growth-oriented strategy, often suitable for investors with a higher risk tolerance. To enhance diversification, consider incorporating other asset classes, such as bonds, which can help stabilize returns during market volatility.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.65%, outperforming many standard benchmarks. However, it experienced a maximum drawdown of -29.03%, indicating significant volatility during market downturns. Such performance metrics are crucial as they highlight the portfolio's potential for high returns but also its susceptibility to large losses. While past performance is not a guarantee of future results, it can guide expectations. To mitigate risk, consider strategies that can cushion against downturns, such as diversifying into less volatile asset classes.

Projection Info

The forward projection uses a Monte Carlo simulation, which is a statistical method that models potential future outcomes based on historical data. With 1,000 simulations, the portfolio has a median projected growth of 421.94%, though individual outcomes vary widely. This simulation suggests a high likelihood of positive returns, with 974 simulations showing gains. However, it's essential to remember that these are hypothetical scenarios and not forecasts. To improve future outcomes, consider optimizing the portfolio by reducing highly correlated assets and exploring diversification opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, accounting for 99.84% of its allocation, with a negligible cash position. While this focus on equities aligns with a growth strategy, it limits diversification benefits that other asset classes, like bonds or real estate, might provide. Diversification across asset classes can reduce risk and improve stability, especially during market downturns. To enhance diversification, consider adding non-equity assets that can provide a buffer in volatile markets and contribute to a more balanced risk-return profile.

Sectors Info

  • Technology
    46%
  • Health Care
    12%
  • Consumer Discretionary
    9%
  • Financials
    9%
  • Telecommunications
    8%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sectoral allocation reveals a significant concentration in technology, comprising 46.04% of the portfolio. This tech-heavy focus can lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. While technology has been a strong performer, relying heavily on one sector can increase risk. Other sectors like healthcare and consumer cyclicals are present but less dominant. To mitigate sector-specific risks, consider balancing the portfolio by increasing exposure to underrepresented sectors, which can provide stability and reduce dependence on technology's performance.

Regions Info

  • North America
    90%
  • Asia Emerging
    8%
  • Europe Developed
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily skewed towards North American equities, representing 90.22% of the allocation. This concentration can limit exposure to growth opportunities in other regions and increase vulnerability to regional economic downturns. A more geographically diversified portfolio can help manage risks associated with currency fluctuations and geopolitical events. To enhance geographic diversification, consider increasing exposure to emerging markets or developed regions outside North America, which can offer different growth dynamics and reduce overall portfolio risk.

Redundant positions Info

  • iShares Core Dividend Growth ETF
    Schwab U.S. Dividend Equity ETF
    High correlation
  • Vanguard Information Technology Index Fund ETF Shares
    Vanguard Growth Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio contains highly correlated groups, such as the iShares Core Dividend Growth ETF and Schwab U.S. Dividend Equity ETF, which can limit diversification benefits. High correlation means these assets tend to move in the same direction, reducing the portfolio's ability to withstand market volatility. By identifying and potentially reducing these overlaps, the portfolio can achieve better diversification and risk management. Consider replacing some of these highly correlated ETFs with assets that have lower correlation to improve the overall diversification and resilience of the portfolio.

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 benefit from optimization using the Efficient Frontier, which aims to maximize returns for a given level of risk. Currently, the portfolio's expected return is below the potential optimal level of 17.89%. Optimization involves adjusting the allocation among existing assets to achieve a more favorable risk-return ratio. However, it's essential to note that efficiency is based on the current assets and does not necessarily imply diversification. To pursue optimization, consider reallocating funds to achieve a balance that aligns with both risk tolerance and return expectations.

Dividends Info

  • iShares Core Dividend Growth ETF 2.20%
  • Invesco NASDAQ Next Gen 100 ETF 0.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • SPDR® S&P Biotech ETF 0.10%
  • Weighted yield (per year) 0.78%

The overall dividend yield of the portfolio is 0.78%, with notable contributions from the Schwab U.S. Dividend Equity ETF at 3.6% and the iShares Core Dividend Growth ETF at 2.2%. While dividends provide a steady income stream, they are not the primary focus of this growth-oriented portfolio. For investors seeking income, increasing allocation to high-dividend-paying assets could be beneficial. However, for growth-focused portfolios, reinvesting dividends can compound returns over time. Balancing growth and income needs is crucial, and adjustments may be necessary depending on the investor's goals.

Ongoing product costs Info

  • iShares Core Dividend Growth ETF 0.08%
  • iShares MSCI India ETF 0.65%
  • Invesco NASDAQ Next Gen 100 ETF 0.15%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • SPDR® S&P Biotech ETF 0.35%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is impressively low at 0.14%, which supports better long-term performance by minimizing costs. Low fees are beneficial as they allow more of the investment returns to be retained, compounding over time. The Vanguard S&P 500 ETF and Schwab U.S. Dividend Equity ETF contribute to this low cost with their minimal fees. Maintaining low costs is a positive aspect of the portfolio, and continuing to focus on cost-efficient investments can enhance returns. Regularly reviewing and managing expenses will ensure that costs remain competitive.

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