Growth-focused portfolio with strong tech emphasis and limited geographic diversification

Report created on Feb 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with SPDR S&P 500 ETF Trust making up 60%, Vanguard Total International Stock Index Fund 20%, NVIDIA Corporation 15%, and Microsoft Corporation 5%. This composition reflects a strong preference for large-cap U.S. equities, which are known for their stability and growth potential. Compared to a typical growth portfolio benchmark, this allocation is quite tech-heavy, which can drive performance but also increase volatility. Consider diversifying further into other asset classes like bonds or real estate to reduce risk and enhance stability.

Growth Info

Historically, the portfolio has delivered impressive returns, with a Compound Annual Growth Rate (CAGR) of 21.13%. This suggests strong performance, particularly given the high weighting in tech stocks. However, the maximum drawdown of -58.16% highlights significant risk during downturns. Compared to benchmarks, the portfolio's performance is robust, but the high volatility demands a strong stomach for market swings. Consider rebalancing to reduce excessive concentration in volatile sectors to mitigate potential future downturns.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows potential for substantial growth. The median outcome suggests a 3,028.6% increase, while even the conservative 5th percentile projects a 389.4% rise. However, it's crucial to remember that these are probabilistic outcomes and not guarantees. The simulations indicate a high likelihood of positive returns, but diversification could further stabilize future performance. Consider periodic reviews and adjustments to maintain alignment with your risk tolerance and goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is overwhelmingly concentrated in stocks, with 99% allocation, and a negligible 1% in cash. This limited diversification across asset classes may increase risk, especially during market downturns. In comparison to diversified benchmarks, this portfolio could benefit from introducing fixed income or alternative investments to provide a buffer during volatile periods. Balancing asset classes can help achieve a more stable risk-return profile and potentially improve long-term resilience.

Sectors Info

  • Technology
    42%
  • Financials
    12%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

With 42% of the portfolio in technology, there's a significant concentration in a single sector. While tech has driven substantial growth recently, it can also be subject to higher volatility, especially during periods of interest rate changes. The remaining sectors provide some diversification, but their smaller allocations may limit their impact. To mitigate sector-specific risks, consider gradually increasing exposure to underrepresented sectors, such as healthcare or consumer goods, which can offer more stability during tech downturns.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 81% of the allocation. This overexposure to one region may limit the benefits of global diversification, potentially increasing vulnerability to regional economic downturns. Compared to global benchmarks, this allocation is less diversified. Expanding exposure to emerging markets or other developed regions can enhance diversification, reduce risk, and capture growth opportunities in different economic cycles.

Market capitalization Info

  • Mega-cap
    56%
  • Large-cap
    27%
  • Mid-cap
    14%
  • Small-cap
    1%

The portfolio is predominantly invested in mega-cap stocks, with 56% allocation, followed by big caps at 27%. This focus on large companies often provides stability and reliable growth, but it may miss out on the higher growth potential of smaller companies. Compared to benchmarks, this allocation is heavily skewed towards large caps. Consider diversifying into mid and small-cap stocks to capture growth potential and increase overall portfolio diversification.

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 benefit from optimization using the Efficient Frontier, which identifies the best risk-return ratio for the current assets. This process involves adjusting allocations to achieve maximum returns for a given level of risk. However, it's important to note that optimization focuses on risk and return, not diversification. Regularly assess the portfolio's alignment with your risk tolerance and goals, and consider rebalancing to maintain optimal efficiency.

Dividends Info

  • Microsoft Corporation 0.70%
  • SPDR S&P 500 ETF Trust 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 1.40%

The portfolio's dividend yield is relatively low at 1.40%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, growth portfolios often prioritize capital appreciation over income generation. Microsoft and the SPDR S&P 500 ETF contribute modest dividends, while the Vanguard International ETF offers higher yields. If income is a priority, consider increasing exposure to high-yield stocks or dividend-focused ETFs to balance growth with income generation.

Ongoing product costs Info

  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.08%. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Compared to industry averages, these costs are competitive, allowing more of your investment to compound over time. Maintaining low costs is a key advantage, so continue monitoring expense ratios and consider cost-effective alternatives if any holdings become more expensive.

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