A growth-focused portfolio with high technology exposure and limited geographic diversification

Report created on Jan 2, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 99.82% in stocks and a minor cash allocation. The Vanguard S&P 500 ETF makes up the largest portion at 55.28%, followed by NVIDIA Corporation at 22.08%. This composition leans towards a concentrated approach, primarily within large-cap U.S. equities. While this structure can drive growth, it lacks diversification compared to balanced portfolios that include bonds or international equities. To enhance diversification, consider introducing asset classes like fixed income or international equities to reduce potential volatility and increase stability.

Growth Info

Historically, the portfolio has delivered a remarkable Compound Annual Growth Rate (CAGR) of 26.4%, indicating strong past performance. However, it also faced a significant maximum drawdown of -36.01%, suggesting periods of high volatility. This performance was largely driven by the strong growth of U.S. equities, particularly in the technology sector. While past performance is impressive, it's important to remember that it does not guarantee future results. Balancing growth with risk management is crucial to maintaining long-term success, so consider strategies to mitigate potential losses.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With a 5th percentile outcome of 227.8% and a 67th percentile of 3,534.86%, the projections highlight the portfolio's growth potential and inherent risk. Notably, 997 out of 1,000 simulations show positive returns, underscoring a favorable outlook. However, these are probabilistic estimates and not certainties. To manage expectations, regularly review your investment strategy and adjust as needed to align with your risk tolerance and financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is heavily skewed towards equities, with an overwhelming 99.82% in stock. This concentration in a single asset class limits diversification and exposes the portfolio to market fluctuations. A more balanced allocation could include bonds or alternative investments to mitigate risk and provide stability. By incorporating different asset classes, you can achieve a more diversified portfolio, potentially smoothing out volatility and enhancing risk-adjusted returns over the long term.

Sectors Info

  • Technology
    45%
  • Financials
    10%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    7%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    2%
  • Basic Materials
    1%

Sector allocation is notably concentrated in technology at 45.31%, followed by financial services and healthcare. This tech-heavy focus can lead to higher volatility, especially during periods of interest rate hikes or regulatory changes. While these sectors have driven growth, a more balanced sector allocation could reduce risk and enhance stability. Consider diversifying into underrepresented sectors to capture different economic cycles and trends, which may provide a more resilient portfolio in varying market conditions.

Regions Info

  • North America
    99%

The portfolio is predominantly invested in North America, with 99.42% exposure, and minimal allocations to other regions. This geographic concentration limits diversification and increases vulnerability to regional economic downturns. To enhance global exposure and reduce risk, consider investing in international equities from developed and emerging markets. This broader geographic diversification can help capture growth opportunities worldwide and provide a buffer against localized 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's current composition could be optimized using the Efficient Frontier, which identifies the best risk-return ratio for a given set of assets. By adjusting the allocation among existing assets, you might achieve a more efficient portfolio. This optimization focuses on maximizing returns for a given level of risk, not necessarily diversification. Regularly reviewing and rebalancing the portfolio can help maintain this optimal balance, ensuring it aligns with your evolving financial goals and risk tolerance.

Dividends Info

  • Arbor Realty Trust 12.40%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.45%

The portfolio's overall dividend yield is 1.45%, with notable contributions from Arbor Realty Trust and the Schwab U.S. Dividend Equity ETF. While dividends provide a steady income stream, the portfolio's focus on growth stocks, like NVIDIA, limits the yield. For those seeking income, consider increasing exposure to dividend-paying stocks or ETFs. Balancing growth and income can enhance total returns and provide stability, especially during volatile periods when capital appreciation may slow.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, thanks to low-cost ETFs like the Vanguard S&P 500 ETF. Keeping costs down is crucial for long-term performance, as high fees can erode returns over time. This cost efficiency aligns well with best practices, ensuring more of your investment gains are retained. However, continue to monitor costs and explore opportunities to reduce them further, such as by replacing higher-fee assets with more cost-effective alternatives.

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