A growth-focused portfolio with a strong U.S. bias and moderate diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a growth-oriented mindset, moderate to high risk tolerance, and a long-term investment horizon. It prioritizes capital appreciation through a concentrated U.S. equity focus, making it ideal for those seeking substantial growth potential. The investor should be comfortable with market volatility and willing to accept short-term fluctuations for the possibility of long-term gains. This portfolio aligns well with individuals aiming to build wealth over time, leveraging U.S. market strengths.

Positions

  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    50.00%
  • Schwab U.S. Small-Cap ETF
    SCHA - US8085246077
    20.00%
  • Schwab U.S. Mid-Cap ETF
    SCHM - US8085245087
    20.00%
  • SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES
    SWISX - US8085098304
    10.00%

The portfolio is heavily weighted towards U.S. equities, with a 50% allocation to the Schwab U.S. Large-Cap Growth ETF. This is complemented by 20% each in U.S. Small-Cap and Mid-Cap ETFs, and a 10% allocation in an international index fund. Compared to a typical growth portfolio, this one leans heavily towards large-cap U.S. stocks, which might limit exposure to other potentially high-growth regions. This composition is well-suited for investors prioritizing growth within the U.S. market but may benefit from increased international diversification for broader exposure.

Growth Info

Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 12.16%. This performance is impressive, especially when compared to typical market benchmarks. However, it also experienced a maximum drawdown of -35.91%, indicating significant volatility. Such volatility is common in growth-focused portfolios, emphasizing the need for investors to have a higher risk tolerance. While past performance is not indicative of future results, this historical data suggests that the portfolio has been successful in achieving growth, though with notable risk.

Projection Info

Using Monte Carlo simulations, which predict future performance based on historical data, the portfolio shows a wide range of potential outcomes. The 50th percentile projects a 210.9% increase, suggesting strong potential growth. However, the 5th percentile shows a -6.5% decline, highlighting possible risks. Monte Carlo simulations provide a statistical perspective on potential returns but cannot account for unforeseen market changes. Investors should use these projections as a guide but remain aware of their limitations.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Bonds
    0%
  • Other
    0%

The portfolio is 100% invested in stocks, with no allocation to bonds, cash, or other asset classes. This singular focus on equities suggests a high-risk, high-reward strategy, typical for growth-oriented investors. While this can lead to significant returns, it also increases vulnerability to market downturns. Diversifying across asset classes, such as including bonds or cash, could provide a buffer against volatility, offering more stability without significantly sacrificing growth potential.

Sectors Info

  • Technology
    30%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Telecommunications
    9%
  • Consumer Staples
    4%
  • Real Estate
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Consumer Discretionary
    1%

Sector allocation is concentrated, with technology making up 30% of the portfolio. This tech-heavy focus could lead to higher volatility, especially during periods of interest rate changes or tech sector downturns. Other sectors like financial services, healthcare, and consumer cyclicals provide some balance, but the concentration in technology suggests a higher risk-reward profile. Investors should consider whether this sector exposure aligns with their risk tolerance and investment goals.

Regions Info

  • North America
    90%
  • Europe Developed
    7%
  • Japan
    2%
  • Australasia
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

The portfolio's geographic exposure is predominantly North American, with 90% allocated to this region. This heavy U.S. focus limits international diversification, which could provide exposure to different economic cycles and growth opportunities. With only 10% allocated internationally, primarily in developed markets, there's limited exposure to emerging markets that might offer higher growth potential. Adjusting geographic allocation could enhance diversification and reduce regional risk.

Market capitalization Info

  • Mega-cap
    37%
  • Small-cap
    25%
  • Mid-cap
    17%
  • Large-cap
    15%
  • Micro-cap
    6%

The portfolio's market capitalization distribution is skewed towards mega-cap stocks at 37%, with small and medium caps making up 25% and 17% respectively. This blend offers a balance of stability and growth potential, as mega-cap stocks provide stability, while small and medium caps offer growth opportunities. However, the relatively small allocation to micro caps could mean missed opportunities for outsized gains. Consideration of market cap distribution could further optimize risk and return.

Redundant positions Info

  • Schwab U.S. Mid-Cap ETF
    Schwab U.S. Small-Cap ETF
    High correlation

The portfolio shows high correlation between the Schwab U.S. Mid-Cap and Small-Cap ETFs, which may limit diversification benefits. High correlation means these assets tend to move together, reducing the overall portfolio's ability to buffer against market downturns. Diversification is key to managing risk, and reducing overlap in highly correlated assets could enhance the portfolio's resilience. Exploring less correlated options might improve diversification.

Dividends Info

  • Schwab U.S. Small-Cap ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Schwab U.S. Mid-Cap ETF 1.30%
  • SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 3.10%
  • Weighted yield (per year) 1.12%

The portfolio has a modest dividend yield of 1.12%, driven largely by the Schwab International Index Fund's 3.10% yield. Dividends can provide a steady income stream, which is beneficial for adding stability to a growth-focused portfolio. However, the primary objective here seems to be capital appreciation rather than income generation. Investors seeking more income might consider increasing exposure to higher-yielding assets, though this could impact growth potential.

Ongoing product costs Info

  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Mid-Cap ETF 0.04%
  • Weighted costs total (per year) 0.04%

The portfolio boasts an impressively low Total Expense Ratio (TER) of 0.04%, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained, compounding over time. This cost efficiency aligns well with best practices for maximizing investment growth. Maintaining low costs is a key factor in achieving better net returns, and this portfolio is already well-positioned in this regard.

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.

The portfolio's current structure may not be fully optimized on the Efficient Frontier, which represents the best possible risk-return balance. By adjusting the allocation among existing assets and potentially incorporating less correlated assets, the portfolio could achieve a more optimal risk-return ratio. This optimization is based solely on the current assets, and changes between them could enhance efficiency without altering the overall investment strategy.

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