Growth-focused portfolio with significant tech exposure and limited geographic diversification

Report created on Jan 22, 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 towards equities, with 100% allocation in stock ETFs. The Vanguard S&P 500 ETF makes up 65% of the portfolio, indicating a strong focus on large-cap U.S. equities. The remaining portion is divided among more specialized ETFs, including a 15% allocation to the VanEck Semiconductor ETF, 10% to the Avantis U.S. Small Cap Value ETF, and 10% to the Schwab U.S. Large-Cap Growth ETF. Compared to a typical diversified portfolio, this one has lower diversity, focusing primarily on growth-oriented U.S. stocks. Balancing the asset allocation could enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 20.55%. However, it has experienced significant volatility, as indicated by a maximum drawdown of -34.45%. This means that while the portfolio has grown substantially on average, it has also faced periods of sharp declines. The performance is largely driven by the S&P 500 and semiconductor sectors, which have seen strong growth in recent years. It's important to remember that past performance does not guarantee future results, so maintaining a balanced approach is key.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast possible future outcomes, suggests a wide range of potential returns. With 1,000 simulations, the median return is projected at 1,530.8%, while the 5th percentile indicates a return of 193.0%. This highlights the portfolio's potential for significant growth but also underscores the inherent risk. While the simulation offers valuable insights, it's important to remember that it relies on historical data, which may not fully predict future market conditions. Regularly reviewing and adjusting the portfolio can help manage risk and align with changing market dynamics.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is concentrated entirely in stocks, which can lead to higher volatility but also offers potential for growth. Compared to a more balanced portfolio that might include bonds or other asset classes, this allocation is less diversified. The focus on equities aligns with the growth profile but may expose the investor to greater risk during market downturns. Introducing other asset classes could provide a buffer against volatility and help stabilize returns over time.

Sectors Info

  • Technology
    42%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Telecommunications
    7%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is heavily skewed towards technology, which makes up 42% of the portfolio. This concentration in tech, along with significant holdings in financial services and consumer cyclicals, suggests a focus on growth sectors. While technology has driven strong returns recently, it may also lead to higher volatility, especially during periods of interest rate changes or regulatory scrutiny. Balancing the sector allocation with more defensive sectors could reduce risk and provide stability.

Regions Info

  • North America
    96%
  • Asia Developed
    2%
  • Europe Developed
    2%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 96% of assets allocated there. This lack of international diversification could expose the portfolio to regional economic risks. While U.S. markets have performed well, incorporating more global exposure, particularly in developed and emerging markets, could enhance diversification and potentially improve risk-adjusted returns. This would help cushion the portfolio against potential U.S. market downturns.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    14%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio's market capitalization distribution is skewed towards larger companies, with 44% in mega-cap and 32% in big-cap stocks. This focus on large-cap stocks offers stability and less volatility compared to smaller companies. However, the inclusion of small and micro-cap stocks, which together make up 11%, provides exposure to potentially higher growth opportunities. Balancing the market cap exposure could optimize risk and return, allowing for both stability and growth potential.

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 current portfolio composition may not be on the Efficient Frontier, which represents the optimal risk-return balance. By adjusting the allocation among existing ETFs, the portfolio could potentially achieve a better risk-return ratio. This involves finding the right mix of assets that maximizes returns for a given level of risk. While this doesn't necessarily mean adding new assets, it does involve fine-tuning the existing ones to enhance efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.03%

With a total dividend yield of 1.03%, the portfolio provides some income, though it is primarily growth-focused. The Vanguard S&P 500 ETF contributes the most to this yield, while other ETFs offer lower yields. For investors seeking income, a higher dividend yield might be desirable. However, for those focused on growth, the current yield aligns with the portfolio's objectives. Balancing growth and income can be achieved by adjusting allocations or adding dividend-focused assets.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.10%, which is relatively low and supports better long-term performance by minimizing costs. The Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF contribute to this low cost with very minimal fees. Keeping expenses low is crucial for maximizing net returns over time. Regularly reviewing and comparing the costs of existing and potential new investments can ensure the portfolio remains cost-efficient.

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