Growth-focused portfolio with a strong tilt towards S&P 500 momentum and international exposure

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 growth-oriented profile, comfortable with higher risk for the potential of higher returns. The focus on momentum strategies and significant allocations to technology and financial sectors indicate a preference for capital appreciation over income. It's tailored for those with a longer investment horizon, allowing time to weather market volatility and capitalize on the growth of large-cap and momentum stocks. Ideal for investors who are not overly concerned with short-term fluctuations and have a risk tolerance aligned with a risk score of 5 out of 7.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    30.00%
  • Invesco S&P International Developed Momentum ETF
    IDMO - US46138E2220
    20.00%

This portfolio is heavily invested in stocks, with a 50% allocation in a broad-market Vanguard S&P 500 ETF, 30% in an Invesco S&P 500® Momentum ETF, and 20% in an Invesco S&P International Developed Momentum ETF. This composition emphasizes growth, particularly through U.S. large-cap stocks that exhibit momentum, alongside a significant international component for geographic diversification. The exclusive focus on ETFs and stocks, without bonds or alternative asset classes, positions this portfolio on the higher end of the risk spectrum, suitable for growth-oriented investors.

Growth Info

Historically, this portfolio has demonstrated a robust Compound Annual Growth Rate (CAGR) of 20.70%, despite experiencing a maximum drawdown of -32.60%. This performance is indicative of high volatility but also significant growth potential. The days contributing to 90% of returns being concentrated in a relatively short period highlights the impact of market timing and momentum strategies on the portfolio's gains. Investors should be prepared for periods of sharp declines, given the high maximum drawdown.

Projection Info

Utilizing Monte Carlo simulations, which project future performance based on historical data, this portfolio shows a wide range of outcomes, from a 257.5% increase at the 5th percentile to a 1,903.5% increase at the 67th percentile. While these simulations suggest a high likelihood of continued growth, with an annualized return of 22.85%, investors should remember that such projections are speculative and depend on market conditions remaining similar to those in the past.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%

The portfolio's allocation is entirely in stocks, reflecting a clear growth strategy but also a higher risk profile. This concentration in equities, without the balance of bonds or other asset classes, means the portfolio could be subject to significant volatility. Diversifying across different asset classes could help mitigate risk while still allowing for considerable growth potential.

Sectors Info

  • Technology
    26%
  • Financials
    22%
  • Consumer Discretionary
    11%
  • Telecommunications
    11%
  • Industrials
    10%
  • Consumer Staples
    6%
  • Health Care
    6%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

Sector allocation is predominantly in Technology and Financial Services, making up nearly half of the portfolio. This concentration could lead to higher volatility, especially in market downturns affecting these sectors. However, it also positions the portfolio to capitalize on growth trends in these industries. Balancing sector exposure may reduce risk without significantly compromising growth potential.

Regions Info

  • North America
    84%
  • Europe Developed
    11%
  • Japan
    2%
  • Australasia
    2%
  • Asia Developed
    1%
  • Africa/Middle East
    0%
  • Asia Emerging
    0%

With 84% of assets in North America and a modest allocation to developed markets in Europe, Japan, and Australasia, the portfolio has a strong bias towards developed markets. This geographic distribution supports stability and growth but may miss out on potential high-growth opportunities in emerging markets. Incorporating a more global perspective could enhance diversification and growth prospects.

Market capitalization Info

  • Mega-cap
    51%
  • Large-cap
    34%
  • Mid-cap
    14%
  • Small-cap
    1%

The focus on Mega and Big cap stocks (85% combined) aligns with the portfolio's growth and momentum strategy, as these companies often have more stable returns. However, the minimal exposure to Medium and Small cap stocks limits potential high-growth opportunities from these segments. A slight increase in allocation to smaller companies could introduce more growth potential, albeit with increased risk.

Dividends Info

  • Invesco S&P International Developed Momentum ETF 1.40%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Vanguard S&P 500 ETF 1.10%
  • Weighted yield (per year) 0.98%

The overall dividend yield of 0.98% suggests a moderate contribution to total returns from dividends. While growth is the primary goal, dividends can provide a steady income stream and reduce volatility. Considering assets with higher dividend yields could offer a more balanced approach to growth and income, especially in volatile markets.

Ongoing product costs Info

  • Invesco S&P International Developed Momentum ETF 0.25%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.10%

The total expense ratio (TER) of 0.10% is impressively low, enhancing long-term returns by minimizing costs. This cost efficiency is a strong aspect of the portfolio, ensuring that more of the returns are retained by the investor. Maintaining focus on low-cost investments is advisable to continue maximizing net returns.

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.

The current allocation suggests a portfolio positioned for growth with a reasonable risk-return balance. However, examining the Efficient Frontier could reveal opportunities to optimize the risk-return ratio further. This might involve adjusting allocations or diversifying into additional asset classes or sectors. Optimization should aim to maintain the growth focus while managing volatility through strategic diversification.

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