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

Report created on Jan 24, 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 consists primarily of growth and index funds, with a significant allocation to the Vanguard Growth Index Fund and Fidelity 500 Index Fund, together making up over 60% of the total. This composition leans heavily towards growth-oriented investments, reflecting a focus on capital appreciation. Compared to a typical balanced portfolio, this one is more concentrated in growth funds, which can offer higher returns but also come with increased volatility. To enhance diversification, consider incorporating a broader mix of asset types, such as bonds or international equities, which can help mitigate risks associated with market fluctuations.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 14.44%, indicating robust growth over time. However, it experienced a maximum drawdown of -32.75%, highlighting potential volatility. The concentrated growth focus contributed to these returns, especially during bullish market conditions. While past performance is not indicative of future results, the portfolio's historical success suggests it has capitalized on market uptrends effectively. To maintain this performance, regularly review market conditions and consider rebalancing to reduce exposure to high-volatility assets during downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows promising potential for this portfolio. With a median return of 976.3% and a high probability of positive returns, the portfolio is well-positioned for growth. However, simulations are not guarantees and rely on historical trends. It's essential to remain aware of market changes that could impact these projections. To harness these insights, periodically reassess your portfolio's alignment with your goals and risk tolerance, adjusting allocations as necessary to stay on track.

Asset classes Info

  • Stocks
    97%
  • Bonds
    2%

The portfolio is heavily weighted towards stocks, comprising 97% of the total allocation. This suggests a strong emphasis on equity growth, which can be beneficial in a rising market but may increase risk during downturns. Compared to a more balanced portfolio, this one lacks significant exposure to bonds, which can provide stability and income. To enhance diversification and reduce volatility, consider integrating a greater proportion of bonds or alternative assets, which can help buffer against equity market swings and provide more consistent returns.

Sectors Info

  • Technology
    36%
  • Financials
    12%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Health Care
    10%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio's sector allocation is notably tech-heavy, with 36% in technology, potentially leading to higher volatility during periods of interest rate hikes. Other sectors, like financial services and consumer cyclical, are also well-represented, providing some balance. However, the reliance on technology could pose risks if the sector underperforms. To mitigate this, consider diversifying further into sectors like healthcare or utilities, which can offer more stable returns and reduce the impact of sector-specific downturns on your overall portfolio performance.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

With 95% of the portfolio's assets allocated to North America, there is a significant home bias, which can limit exposure to international growth opportunities. While this concentration benefits from the stability and growth of U.S. markets, it may miss out on potential gains from emerging markets or other global regions. To enhance geographic diversification, consider increasing allocations to international equities, which can provide a hedge against domestic market volatility and tap into the growth potential of other economies.

Market capitalization Info

  • Mega-cap
    50%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 50% in mega-cap and 31% in big-cap companies. This focus on established, well-capitalized firms offers stability and steady growth but may limit exposure to the potentially higher returns of small-cap stocks. While large-cap investments are generally less volatile, incorporating more medium and small-cap stocks could enhance growth potential and diversification. Consider balancing your market cap exposure to capture opportunities across different company sizes and growth stages.

Redundant positions Info

  • VANGUARD GROWTH INDEX FUND ADMIRAL SHARES
    T. ROWE PRICE BLUE CHIP GROWTH FUND INC. T. ROWE PRICE BLUE CHIP GROWTH FUND INC.
    Technology Select Sector SPDR® Fund
    Fidelity 500 Index Fund
    Vanguard S&P 500 ETF
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation
  • Schwab U.S. Dividend Equity ETF
    VANGUARD VALUE INDEX FUND ADMIRAL SHARES
    High correlation

The portfolio features several highly correlated assets, particularly among growth funds and tech-focused ETFs. This correlation can limit diversification benefits, as these assets tend to move in tandem, especially during market downturns. To improve diversification, consider reducing exposure to overlapping investments and introducing assets with lower correlations, such as bonds or international equities. This strategy can help mitigate risk and enhance the portfolio's resilience against market volatility.

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 seeks the best possible risk-return ratio by adjusting asset allocations. Currently, the portfolio's high correlation among assets suggests limited diversification benefits. By reallocating towards less correlated assets, you can potentially achieve a more efficient balance between risk and return. This optimization does not guarantee diversification or other goals, but it can enhance the portfolio's overall performance by strategically managing risk and maximizing potential returns.

Dividends Info

  • Fidelity 500 Index Fund 1.20%
  • iShares Core S&P Mid-Cap ETF 1.30%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • VanEck Semiconductor ETF 0.40%
  • T. ROWE PRICE BLUE CHIP GROWTH FUND INC. T. ROWE PRICE BLUE CHIP GROWTH FUND INC. 8.60%
  • VANGUARD GROWTH INDEX FUND ADMIRAL SHARES 0.30%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • VANGUARD VALUE INDEX FUND ADMIRAL SHARES 2.20%
  • Technology Select Sector SPDR® Fund 0.50%
  • Weighted yield (per year) 1.59%

The portfolio's dividend yield is relatively low at 1.59%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation. High-yield assets like the Schwab U.S. Dividend Equity ETF offer some balance, but overall, dividends are not a significant contributor to returns. If income generation is a priority, consider reallocating some assets to higher-yielding investments, which can provide regular cash flow and potentially enhance total returns over time.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • T. ROWE PRICE NEW AMERICA GROWTH FUND T. ROWE PRICE NEW AMERICA GROWTH FUND 0.79%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • VanEck Semiconductor ETF 0.35%
  • T. ROWE PRICE BLUE CHIP GROWTH FUND INC. T. ROWE PRICE BLUE CHIP GROWTH FUND INC. 0.70%
  • VANGUARD GROWTH INDEX FUND ADMIRAL SHARES 0.05%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Target Retirement 2045 Fund Investor Shares 0.08%
  • VANGUARD VALUE INDEX FUND ADMIRAL SHARES 0.05%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is impressively low at 0.11%, supporting better long-term performance by minimizing costs. Low fees are crucial for maximizing net returns, especially in a growth-focused portfolio where compounding can significantly impact wealth accumulation. Maintaining low costs is a strength of this portfolio. To continue benefiting from this advantage, regularly review fund fees and consider cost-effective alternatives if necessary, ensuring that expenses do not erode your investment gains over time.

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