A growth-focused portfolio with high US exposure and limited diversification

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards U.S. equity ETFs, with a notable 50% allocation to the Schwab U.S. Large-Cap Growth ETF. The remaining positions include a 25% allocation to Avantis® U.S. Small Cap Value ETF, 20% to Invesco S&P MidCap Quality ETF, and 5% to VanEck Semiconductor ETF. This composition is typical of a growth-focused strategy, prioritizing large-cap growth and small-cap value, but lacks diversification across asset classes. Investors should be aware that such concentration may lead to increased volatility, especially in market downturns. Consider diversifying into other asset classes like bonds or international equities to balance risk and potential returns.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 21.08%, significantly outperforming many benchmarks. However, it also experienced a maximum drawdown of -36.37%, highlighting potential vulnerability during market downturns. The high returns are appealing, but the volatility risk is notable. Investors should weigh the impressive growth against the risk of substantial losses during market corrections. Maintaining a long-term perspective and ensuring a robust risk management strategy can help mitigate these concerns.

Projection Info

The Monte Carlo simulation, with 1,000 iterations, projects a wide range of potential outcomes, reflecting the inherent uncertainty in future market conditions. The median scenario suggests a substantial growth of 1,497.54%, with a 5th percentile outcome of 138.25% and a 67th percentile of 2,562.31%. While these projections are promising, it's crucial to remember that they are based on historical data and assumptions, which may not hold in the future. Investors should use these simulations as a guideline, not a guarantee, and remain prepared for varying market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is overwhelmingly concentrated in stocks, accounting for nearly 100% of the holdings. This lack of diversification across asset classes increases exposure to equity market volatility. While equities offer growth potential, introducing other asset classes, such as bonds or real estate, could provide stability and reduce risk. Diversifying across asset classes can enhance the portfolio's resilience against market fluctuations and provide more balanced returns over time.

Sectors Info

  • Technology
    34%
  • Consumer Discretionary
    13%
  • Financials
    13%
  • Industrials
    13%
  • Health Care
    7%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    4%
  • Consumer Staples
    3%

The portfolio is heavily tilted towards the technology sector, comprising approximately 33.82% of the total holdings. This concentration aligns with a growth-focused strategy but may lead to increased volatility, especially during periods of economic uncertainty or interest rate hikes. Other sectors, such as consumer cyclicals and financial services, are present but less dominant. Investors might consider rebalancing to achieve a more even sector distribution, potentially reducing risk and enhancing diversification.

Regions Info

  • North America
    98%
  • Europe Developed
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly concentrated in North America, with 98.03% exposure, leaving minimal allocation to other regions. This concentration may limit the benefits of geographic diversification, such as reduced risk and exposure to different economic cycles. Consider increasing exposure to international markets, including developed and emerging regions, to enhance diversification and capture growth opportunities outside the U.S. This approach can provide a buffer against regional economic downturns.

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 potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based solely on current holdings. This process involves adjusting the allocation among existing assets to achieve a more efficient balance of risk and return. While this optimization does not necessarily imply diversification, it can enhance the portfolio's performance by aligning with the investor's risk tolerance and return objectives. Regularly reviewing and adjusting allocations can help maintain this optimal balance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • VanEck Semiconductor ETF 0.40%
  • Invesco S&P MidCap Quality ETF 5.00%
  • Weighted yield (per year) 1.62%

The portfolio's overall dividend yield stands at 1.62%, with the Invesco S&P MidCap Quality ETF contributing a substantial 5.0% yield. While dividends can provide a steady income stream and enhance total returns, the focus on growth-oriented funds suggests that capital appreciation is the primary goal. Investors seeking income might consider increasing exposure to higher-yielding assets. However, balancing growth and income is essential to align with long-term investment objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is relatively low at 0.15%, which is beneficial for long-term performance. Lower costs mean more of your money stays invested, compounding over time. The Schwab U.S. Large-Cap Growth ETF, with a TER of 0.04%, is particularly cost-effective. It's important to regularly review and compare fees across your holdings to ensure cost efficiency. Consider replacing higher-fee assets with lower-cost alternatives to maximize returns.

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