Balanced Growth Portfolio with Strong Tech Focus and High Historical Returns

Report created on Dec 4, 2024

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 composed of six ETFs, with a significant 55% allocated to the Vanguard S&P 500 ETF, providing broad exposure to large-cap U.S. equities. The remaining investments are spread across various sectors, with a notable focus on technology, as seen in the allocations to the Fidelity MSCI Information Technology Index ETF and VanEck Semiconductor ETF. This composition indicates a growth-oriented strategy, leveraging the performance of large-cap U.S. stocks while diversifying through international exposure and thematic investments in tech and innovation.

Growth Info

Historically, the portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 19.12%. However, this performance comes with substantial volatility, as evidenced by a maximum drawdown of 34.4%. This suggests that while the portfolio has the potential for high returns, it may also experience significant fluctuations during market downturns. Investors should be prepared for this volatility and ensure that it aligns with their risk tolerance and investment objectives, as historical performance is not necessarily indicative of future results.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio demonstrates a wide range of potential outcomes. Assuming a hypothetical initial investment, the median (50th percentile) projection shows a return of 1,035.21%, while the 5th percentile suggests a return of 96.35%, indicating a low probability of loss. The 67th percentile projects a return of 1,636.36%, highlighting the potential for significant growth. This simulation provides a probabilistic view of future performance, helping investors understand the range of possible outcomes and the associated risks.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with 99.76% in stocks, reflecting its growth-oriented nature. A minimal allocation to cash and other asset classes suggests a focus on maximizing returns through equity exposure. While this approach can yield substantial gains, it also increases vulnerability to market volatility. Investors seeking to diversify risk might consider incorporating fixed-income or alternative investments to balance the portfolio, though the current strategy aligns well with a high-risk, high-reward investment profile.

Sectors Info

  • Technology
    42%
  • Financials
    12%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a strong emphasis on technology, comprising 42.22% of the portfolio. This focus on tech stocks aligns with current market trends favoring innovation and digital transformation. Other sectors like financial services and industrials provide additional diversification, albeit with smaller allocations. While technology has driven significant returns, investors should be aware of sector-specific risks and consider whether this concentration aligns with their long-term investment goals. A more balanced sector approach could mitigate potential risks associated with sector volatility.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Japan
    3%
  • Asia Developed
    2%
  • Asia Emerging
    2%
  • Australasia
    1%

Geographically, the portfolio is predominantly invested in North America, accounting for 86.31% of the allocation, with limited exposure to other regions. This concentration reflects a strong belief in the U.S. market's growth prospects but may expose the portfolio to regional risks. Diversifying across more geographic areas could reduce this risk and potentially enhance returns by capturing growth opportunities in emerging markets. Investors should assess whether this geographic concentration aligns with their risk appetite and consider broadening their international exposure.

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 optimization analysis suggests that while the current composition is well-aligned with a growth strategy, there may be room for refinement. Moving along the efficient frontier, investors can achieve a riskier or more conservative portfolio by adjusting allocations between asset classes. For those seeking higher returns, increasing exposure to high-growth sectors could be beneficial. Conversely, those looking to reduce risk might consider incorporating more diversified asset classes. However, before making changes, investors should ensure their portfolio aligns with their risk tolerance and financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Global X Robotics & Artificial Intelligence ETF 0.10%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.21%

The portfolio's dividend yield stands at 1.21%, with the highest contribution from the Vanguard Total International Stock Index Fund ETF Shares at 2.9%. This modest yield reflects the growth-oriented focus, prioritizing capital appreciation over income generation. While dividends can provide a steady income stream, the current yield may not satisfy income-focused investors. Those seeking higher income might consider reallocating to dividend-focused investments. However, the current setup is well-suited for investors prioritizing long-term capital growth over immediate income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Global X Robotics & Artificial Intelligence ETF 0.68%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The total expense ratio (TER) of the portfolio is 0.12%, indicating a cost-efficient structure. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, contributes significantly to keeping costs low. While some ETFs, like the Global X Robotics & Artificial Intelligence ETF, have higher expense ratios, the overall cost remains competitive. Low costs are crucial for maximizing net returns, and this portfolio effectively balances expense management with exposure to diverse growth opportunities. Investors should continue to monitor costs to ensure they remain aligned with their financial goals.

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