A growth-focused portfolio with high tech exposure and moderate international diversification

Report created on Dec 20, 2024

Risk profile Info

5/7
Growth
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Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

The portfolio is composed primarily of ETFs, with significant allocations to the Invesco NASDAQ 100 ETF and Vanguard S&P 500 ETF, each at approximately 31.6%. A notable portion is also allocated to the Vanguard Total International Stock Index Fund ETF and the Global X Artificial Intelligence & Technology ETF. This composition leans heavily towards equities, typical for a growth-oriented portfolio. Compared to common benchmarks, the portfolio shows a strong tilt towards U.S. equities, which can be beneficial for capitalizing on the robust U.S. market but may limit exposure to other potentially lucrative regions.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.6%, indicating solid performance over time. This is an impressive figure, especially when compared to typical benchmark indices. However, it's important to note the portfolio experienced a maximum drawdown of -31.11%, highlighting its vulnerability during market downturns. The concentration of returns in just 16 days suggests high volatility. While past performance is promising, it does not guarantee future results, so maintaining a diversified and balanced approach remains crucial.

Projection Info

Forward projections using Monte Carlo simulations, which assess potential future outcomes based on historical data, indicate a favorable outlook. The median simulation suggests a potential portfolio growth of over 400%, with a high probability of positive returns, as 989 out of 1,000 simulations were profitable. However, it's important to remember that such projections are not certainties. They provide a range of possible outcomes, emphasizing the need for ongoing portfolio review and adjustments to align with changing market conditions and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with nearly 99.5% of assets in equities. This allocation reflects a strong growth orientation, typical for investors seeking higher returns. However, it also increases exposure to market volatility. A more diversified asset class mix, potentially including bonds or real assets, could help mitigate risk. Comparing to benchmarks, the portfolio's equity concentration is higher, suggesting a need to assess risk tolerance and consider incorporating other asset classes for a more balanced risk-return profile.

Sectors Info

  • Technology
    40%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    9%
  • Industrials
    8%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio shows a significant concentration in the technology sector, accounting for nearly 40% of the allocation. While this has driven strong historical returns, it also increases susceptibility to sector-specific risks, such as regulatory changes or technological disruptions. Other sectors like consumer cyclicals and communication services also have notable allocations. While this sectoral bias aligns with recent market trends, it's essential to monitor sector performance and consider rebalancing to ensure long-term stability and risk management.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, with 76.2% of the assets allocated there. This heavy concentration in the U.S. market can be advantageous due to its economic strength but may limit exposure to growth opportunities in emerging markets. The portfolio's international exposure through the Vanguard Total International Stock Index Fund ETF provides some diversification, though it remains below typical global benchmarks. Expanding geographic diversification could enhance resilience against regional economic fluctuations.

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, a concept that seeks the best possible risk-return ratio based on current assets. This involves adjusting allocation weights to achieve the highest expected return for a given level of risk. While the current portfolio is well-positioned for growth, exploring optimization could enhance overall efficiency. It's important to note that this process focuses on the existing asset selection, and diversification or other goals may require separate considerations.

Dividends Info

  • Global X Artificial Intelligence & Technology ETF 0.20%
  • Invesco NASDAQ 100 ETF 0.50%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 0.81%

The portfolio's overall dividend yield is relatively modest at 0.81%, reflecting its growth-focused strategy. While dividends contribute to total returns, the emphasis here is clearly on capital appreciation. This approach suits investors prioritizing growth over income. However, incorporating higher-yielding assets could provide a buffer during market volatility and enhance total returns. For those seeking income, a slight shift towards dividend-paying stocks or funds might be beneficial, balancing growth with consistent income.

Ongoing product costs Info

  • Global X Artificial Intelligence & Technology ETF 0.68%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is competitively low, supporting better long-term returns. The use of low-cost ETFs like the Vanguard S&P 500 ETF and Vanguard Total International Stock Index Fund ETF keeps expenses in check. However, the Global X Artificial Intelligence & Technology ETF has a higher expense ratio of 0.68%, which could be worth reviewing. Minimizing costs is crucial for maximizing net returns, so periodically evaluating and potentially replacing higher-cost assets with more cost-effective options is advisable.

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