A growth-focused portfolio with heavy tech exposure and limited geographic diversification

Report created on Jan 18, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted in ETFs, with a significant emphasis on technology and growth sectors. The allocation is split between four ETFs: Vanguard Information Technology Index Fund ETF Shares (30%), Vanguard S&P 500 ETF (30%), Schwab U.S. Dividend Equity ETF (20%), and Vanguard Growth Index Fund ETF Shares (20%). Compared to a typical balanced portfolio, this structure leans heavily toward growth and technology stocks, lacking exposure to bonds or alternative assets. To enhance diversification, consider integrating different asset classes like bonds or international equities, which can provide stability and reduce overall risk.

Growth Info

Historically, this portfolio has delivered strong performance, with a Compound Annual Growth Rate (CAGR) of 16.69%. This impressive growth is tempered by a maximum drawdown of -32.53%, indicating significant volatility. The portfolio's returns are concentrated, with 90% of gains occurring in just 38 days. While past performance is not indicative of future results, this volatility suggests a high-risk, high-reward profile. To mitigate risk, consider incorporating more stable, income-generating assets that can provide a buffer during market downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a wide range of potential returns. With 1,000 simulations, the portfolio's end values range from a 5th percentile of 126.5% to a 67th percentile of 999.22%. The annualized return across simulations is 17.7%, suggesting optimism for future growth. However, it's important to remember that simulations rely on past data and cannot predict future market conditions. Diversifying asset classes and geographic exposure could help smooth potential future volatility.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks (99.88%), with minimal cash holdings (0.12%). This concentration in equities aligns with a growth-focused strategy but lacks the balance typically found in diversified portfolios. A more diversified asset allocation could include bonds or real estate, which can provide income and reduce volatility. By incorporating a broader range of asset classes, the portfolio can achieve a more balanced risk-return profile and potentially improve resilience in different market environments.

Sectors Info

  • Technology
    52%
  • Financials
    9%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

The sector allocation is heavily skewed towards technology, comprising 51.95% of the portfolio. This concentration could lead to increased volatility, especially during periods of tech sector instability. Other sectors like financial services (9.02%) and consumer cyclicals (8.55%) are also represented but to a lesser extent. To mitigate sector-specific risks, consider diversifying into underrepresented sectors such as utilities or consumer defensive stocks, which can offer stability and income during economic downturns.

Regions Info

  • North America
    99%

Geographically, the portfolio is almost entirely focused on North America (99.44%), with negligible exposure to other regions. This lack of international diversification may limit growth opportunities and increase vulnerability to local market downturns. Expanding geographic exposure to include more developed and emerging markets could enhance diversification and capture growth in different economic environments. Consider adding international ETFs or funds that provide access to diverse global markets.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Vanguard Growth Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio's assets are highly correlated, particularly the Vanguard Information Technology Index Fund ETF Shares, Vanguard Growth Index Fund ETF Shares, and Vanguard S&P 500 ETF. High correlation among assets can diminish diversification benefits, as they tend to move in tandem during market fluctuations. To enhance diversification, consider reducing exposure to overlapping assets and incorporating investments that have historically low correlation with each other, such as bonds or international equities.

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.

To optimize the portfolio using the Efficient Frontier, focus on balancing risk and return by adjusting current asset allocations. The Efficient Frontier is a concept that helps identify the best possible risk-return ratio for a given set of assets. Start by reducing highly correlated assets, which do not add diversification benefits, and explore adding less correlated investments. This approach can help achieve a more efficient portfolio, potentially enhancing returns without increasing risk.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 1.36%

The portfolio's overall dividend yield is 1.36%, with the Schwab U.S. Dividend Equity ETF contributing a significant 3.6%. This yield provides a modest income stream, which can be beneficial for reinvestment or as a buffer during market volatility. For growth-focused investors, dividends can also be reinvested to compound returns. If income generation is a priority, consider increasing exposure to dividend-focused funds or stocks, which can enhance cash flow and provide stability.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is low at 0.06%, which is advantageous for long-term growth as lower costs can significantly enhance net returns over time. Each ETF in the portfolio has a competitive expense ratio, with the Vanguard S&P 500 ETF at just 0.03%. This efficient cost structure aligns well with best practices for minimizing fees. Continue to monitor expense ratios and consider replacing any higher-fee assets with more cost-effective alternatives to maintain this advantage.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey