A growth-focused portfolio with a high concentration in technology and limited geographic diversity

Report created on Feb 3, 2025

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 Defiance Quantum comprising 47.17% of the total. The Vanguard S&P 500 Growth Index Fund ETF Shares make up 41.06%, and the Vanguard Financials Index Fund ETF Shares account for 11.76%. This composition indicates a strong focus on growth, particularly in the technology sector, with a moderate level of diversification. Compared to a typical balanced portfolio, this one leans heavily on growth-focused assets, which could lead to higher returns but also increased volatility. Consider reallocating a portion of the portfolio to include more defensive assets to reduce potential risks and improve diversification.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 19.83%, indicating robust past performance. However, it has also experienced a significant maximum drawdown of -34.51%, highlighting its susceptibility to market downturns. This volatility is typical for growth-oriented portfolios, which aim for high returns but can suffer substantial losses during market corrections. While past performance is impressive, it's important to remember that it doesn't guarantee future results. Regularly reviewing and adjusting the portfolio's risk exposure can help manage potential downturns while maintaining growth potential.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest an annualized return of 20.17% for this portfolio. The simulations indicate a wide range of potential outcomes, with the 5th percentile showing a 90% return and the 67th percentile projecting a 1,283.1% return. While these projections provide a sense of potential performance, they are based on past data and do not account for future market changes. It's crucial to approach these projections with caution and regularly reassess the portfolio's alignment with personal investment goals and risk tolerance.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's allocation is heavily skewed towards stocks, which comprise 99% of the total assets, leaving just 1% in cash. This concentration in equities aligns with a growth-focused strategy, aiming for higher returns. However, it also increases exposure to market volatility. Compared to a more balanced portfolio, the lack of fixed income or alternative assets could limit diversification benefits. To enhance risk management, consider diversifying into other asset classes, such as bonds or real assets, which can provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    54%
  • Financials
    16%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Discretionary
    6%
  • Health Care
    3%
  • Consumer Staples
    1%
  • Real Estate
    1%
  • Utilities
    1%

With 54% in technology, the portfolio is heavily concentrated in this sector, followed by financial services at 16%. Other sectors like communication services, industrials, and consumer cyclicals have smaller allocations. This tech-heavy focus can lead to higher returns during periods of technological innovation but also increases vulnerability to sector-specific risks, such as regulatory changes or economic shifts. To mitigate these risks, consider diversifying across sectors, potentially increasing exposure to more stable sectors like healthcare or consumer defensive, which can provide a buffer during market downturns.

Regions Info

  • North America
    83%
  • Europe Developed
    7%
  • Japan
    4%
  • Asia Developed
    3%
  • Asia Emerging
    2%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly in North America, accounting for 83% of the assets. This heavy concentration in a single region limits exposure to international markets, which could provide diversification benefits and reduce regional economic risks. While the U.S. market has performed well historically, global diversification can help capture growth opportunities in other regions. Consider increasing exposure to emerging markets or other developed regions to balance the geographic distribution and enhance the portfolio's resilience to regional economic fluctuations.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    36%
  • Mid-cap
    14%
  • Small-cap
    8%
  • Micro-cap
    2%

The portfolio is diversified across market capitalizations, with 39% in mega-cap, 36% in big-cap, and smaller allocations in medium, small, and micro-cap stocks. This distribution provides a mix of stability from larger companies and growth potential from smaller ones. However, the relatively low exposure to small and micro-cap stocks may limit the portfolio's ability to capitalize on high-growth opportunities. To optimize the balance between stability and growth, consider adjusting the allocation to increase exposure to small and micro-cap stocks, which can enhance diversification and potential 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.

Click on the colored dots to explore allocations.

This portfolio can potentially be optimized using the Efficient Frontier concept, which focuses on achieving the best possible risk-return ratio. By adjusting the current asset allocation, it's possible to enhance the portfolio's efficiency without necessarily increasing diversification. This involves reallocating assets to achieve a balance where expected returns are maximized for a given level of risk. Regularly reviewing the portfolio's alignment with the Efficient Frontier can help ensure that the asset mix remains optimal as market conditions and personal investment goals evolve.

Dividends Info

  • Defiance Quantum 0.60%
  • Vanguard Financials Index Fund ETF Shares 1.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • Weighted yield (per year) 0.54%

The portfolio's dividend yield is relatively low at 0.54%, with the Vanguard Financials Index Fund ETF Shares contributing the highest yield at 1.10%. This reflects the growth-focused nature of the portfolio, which prioritizes capital appreciation over income generation. While dividends can provide a steady income stream and reduce reliance on capital gains, they are less critical for growth-oriented investors. If income is a priority, consider increasing exposure to dividend-paying stocks or funds to enhance yield without sacrificing growth potential.

Ongoing product costs Info

  • Defiance Quantum 0.40%
  • Vanguard Financials Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is relatively low and supports better long-term performance by minimizing costs. The Vanguard ETFs contribute to this low cost with expense ratios of 0.10%, while the Defiance Quantum ETF has a higher cost of 0.40%. Keeping costs low is crucial for maximizing net returns, especially in a growth-focused portfolio where compounding can significantly impact long-term wealth accumulation. Continue monitoring expense ratios and consider cost-effective alternatives if new opportunities arise to further reduce costs.

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