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A growth-oriented portfolio with strong U.S. focus and moderate risk exposure

Report created on Jan 18, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is heavily weighted towards U.S. equities, with 84.68% in stocks and a notable 15% allocation to gold. The Vanguard Total Stock Market Index Fund and Schwab U.S. Large-Cap Growth ETF together form 55% of the portfolio, indicating a significant focus on broad and large-cap U.S. equities. Comparing this to common benchmarks, the portfolio is less diversified across asset classes. A more balanced composition could include bonds or international equities to mitigate risk and potentially enhance returns.

Growth Info

Historically, the portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 16.22%. However, it experienced a maximum drawdown of -30.99%, indicating potential volatility. Compared to benchmarks, this performance suggests a high-risk, high-reward strategy. While past performance is impressive, it's essential to remember that historical returns do not guarantee future success. Diversifying further could help reduce volatility and drawdowns.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes for this portfolio, with a median return of 661.78%. This method uses historical data to simulate future scenarios, highlighting both potential gains and risks. While the simulation suggests a positive outlook, with 991 out of 1,000 simulations showing positive returns, it's important to note that these projections are based on past data and may not fully account for future market conditions. Regularly reviewing and adjusting the portfolio can help manage risks.

Asset classes Info

  • Stocks
    85%
  • Other
    15%

The portfolio's asset allocation is primarily in stocks (84.68%), with a smaller allocation to gold (15%). This concentration in equities suggests a focus on capital appreciation, but it may expose the portfolio to higher volatility. Compared to more diversified benchmarks, this allocation lacks exposure to fixed-income assets, which could provide stability during market downturns. Incorporating bonds or other asset classes could enhance diversification and reduce overall risk.

Sectors Info

  • Technology
    24%
  • Industrials
    20%
  • Financials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    3%
  • Real Estate
    2%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%

Sector-wise, the portfolio is heavily weighted in technology (23.55%) and industrials (19.87%), with lesser exposure to other sectors like financial services and healthcare. This concentration can lead to increased volatility, especially if these sectors face downturns. A more balanced sector allocation would help mitigate risks associated with sector-specific challenges. Reviewing and potentially redistributing sector weights could enhance the portfolio's resilience to market fluctuations.

Regions Info

  • North America
    85%

Geographically, the portfolio is overwhelmingly focused on North America (84.62%), with minimal exposure to other regions. This concentration may limit diversification benefits and expose the portfolio to region-specific risks. Comparing this to global benchmarks, the portfolio could benefit from increased international exposure. Including assets from Europe, Asia, or emerging markets could provide growth opportunities and reduce dependency on the U.S. market.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets often move in the same direction, reducing diversification benefits. In market downturns, this could lead to larger losses. To enhance diversification, consider replacing or adjusting these holdings with assets that have lower correlation, thereby improving the portfolio’s risk management.

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.

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Optimizing the portfolio using the Efficient Frontier could enhance the risk-return profile by adjusting current asset allocations. This method identifies the best possible risk-return ratio, given the existing assets. However, any optimization should first address the high correlation between certain assets to ensure true diversification. By rebalancing towards the Efficient Frontier, the portfolio can achieve a more effective balance between risk and potential returns.

Dividends Info

  • First Trust RBA American Industrial RenaissanceTM ETF 0.10%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 0.74%

The portfolio's overall dividend yield is modest at 0.74%, with the highest contributions from the Vanguard Small-Cap and Total Stock Market ETFs at 1.3% each. For growth-focused investors, dividends may not be a primary concern, but they do provide a steady income stream that can cushion against market volatility. If income is a goal, consider adding higher-yielding assets to boost overall returns through dividends, without compromising growth potential.

Ongoing product costs Info

  • Goldman Sachs Physical Gold ETF 0.18%
  • First Trust RBA American Industrial RenaissanceTM ETF 0.70%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is low at 0.16%, with the Schwab U.S. Large-Cap Growth ETF having the lowest at 0.04%. This cost efficiency supports better long-term returns, as lower fees mean more of the investment's returns are retained. High-cost funds can erode gains over time, so maintaining this cost structure is beneficial. Regularly reviewing and comparing fund fees ensures continued cost-effectiveness, supporting the portfolio's growth objectives.

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