A growth-oriented portfolio with significant technology exposure and limited geographic diversification

Report created on Jan 26, 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 consists entirely of ETFs, with a heavy emphasis on large-cap U.S. equities. The Vanguard S&P 500 ETF makes up 50% of the portfolio, providing broad exposure to large-cap stocks. The Invesco NASDAQ 100 ETF, at 30%, adds a tech-heavy tilt, while the Avantis® U.S. Small Cap Value ETF and Invesco S&P MidCap Momentum ETF, each at 10%, offer some diversification into small and mid-cap stocks. Compared to a typical growth benchmark, this portfolio is concentrated in large-cap equities, suggesting a focus on stability within the growth category.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 16.94%, significantly outperforming typical market benchmarks. However, it also experienced a maximum drawdown of -25.87%, reflecting its growth orientation and associated volatility. While past performance is impressive, it's crucial to remember that historical data doesn't guarantee future results. The portfolio's performance during critical market days, where 90% of returns came from just 22 days, highlights the importance of staying invested during volatile periods.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a range of potential returns for the portfolio. With 1,000 simulations, the 5th percentile shows a 176.6% return, while the median is 933.5%, indicating a broad range of possible outcomes. Although the simulation indicates a high probability of positive returns, with 996 simulations showing gains, it's important to remember that these projections are based on past data and assumptions that may not hold in the future.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in equities, with no allocation to other asset classes like bonds or cash. This 100% stock allocation indicates a high-risk, high-reward strategy, which aligns with a growth-focused investment approach. While this can lead to significant returns during bull markets, it also exposes the portfolio to higher volatility. For investors seeking more stability, introducing other asset classes could provide a buffer against market downturns.

Sectors Info

  • Technology
    33%
  • Consumer Discretionary
    13%
  • Financials
    12%
  • Industrials
    10%
  • Telecommunications
    9%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio's sector allocation shows a strong bias towards technology, which constitutes 33% of the holdings. This is notably higher than typical market benchmarks, indicating a potential for higher volatility, especially during periods of interest rate hikes or tech sector downturns. While this concentration can drive growth, it may also increase risk. Balancing sector exposure by slightly reducing tech holdings and increasing allocations in underrepresented sectors like healthcare or utilities could enhance stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of assets allocated to North America, the portfolio lacks geographic diversification. This heavy concentration in the U.S. market means that the portfolio's performance is closely tied to the U.S. economy. While the U.S. has been a strong performer, diversifying into other regions, such as Europe or emerging markets, could reduce risk and capture growth opportunities in different economic environments. This diversification might mitigate risks associated with U.S.-specific economic or political events.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    28%
  • Mid-cap
    18%
  • Small-cap
    10%
  • Micro-cap
    5%

The portfolio's market capitalization allocation is heavily weighted towards mega and large-cap stocks, comprising 67% of the holdings. This focus provides stability and lower risk, as these companies are typically well-established. However, the 10% allocation to small caps and 5% to micro caps introduces an element of growth potential and risk. Balancing these allocations could enhance diversification, potentially improving returns while managing risk, especially during market turbulence.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. The current portfolio's expected return is below the optimal level, suggesting room for improvement. Adjusting asset allocations within the existing holdings could enhance returns without increasing risk. This optimization focuses on achieving the best risk-return trade-off, not necessarily diversification or other goals. It's a useful tool for refining portfolio efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 0.96%

The portfolio's total dividend yield is 0.96%, which is relatively low and typical for a growth-focused strategy. While dividends can provide a steady income stream, the emphasis here is on capital appreciation. Investors seeking income may want to consider increasing exposure to higher-yielding assets. However, for those focused on growth, maintaining the current low-yield approach aligns with the goal of maximizing capital gains over time.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. The low costs are a positive aspect, indicating that the portfolio is well-structured for cost-conscious investors. Maintaining this low-cost structure is advisable, as higher expenses can significantly erode returns over time, especially in a growth-oriented portfolio where compounding is crucial.

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