This portfolio has only about 4.8 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.

High Risk High Reward Portfolio with Low Diversification and Strong U.S. Focus

Report created on Jul 26, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted toward U.S. equities, with a strong emphasis on large-cap growth stocks. Schwab U.S. Large-Cap Growth ETF makes up 37.5%, followed by Vanguard S&P 500 ETF at 25%, and Vanguard Total Stock Market Index Fund ETF Shares at 21.88%. The remaining 15.62% is allocated to Avantis U.S. Small Cap Value ETF. This composition indicates a high-risk, high-reward strategy primarily focused on capital appreciation. To mitigate risk, consider diversifying into other asset classes like bonds or international equities.

Growth Info

Historically, the portfolio has performed exceptionally well, with a compound annual growth rate (CAGR) of 16.89%. However, it has also experienced significant volatility, with a max drawdown of -35.3%. This means that while the returns have been strong, the portfolio has also seen substantial declines. Understanding this helps in setting realistic expectations and mental preparedness for future market downturns. To balance potential high returns with risk, consider adding more stable investments.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's projected annualized return is 20.47%. The 5th percentile projection shows an 88.12% return, while the 50th and 67th percentiles show 820.73% and 1,254.56% returns, respectively. These projections indicate a wide range of possible outcomes, underscoring the portfolio's high-risk nature. Monte Carlo simulations provide a probabilistic view of future performance, helping investors understand the range of potential outcomes. To enhance portfolio stability, consider reallocating a portion to less volatile assets.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, accounting for 99.84% of the total allocation, with a negligible 0.16% in cash. This heavy stock allocation aligns with a high-risk, high-reward investment strategy. While stocks offer substantial growth potential, they also come with significant risk. Diversifying into other asset classes like bonds or real estate can help reduce volatility and provide more stable returns. A more balanced asset allocation could improve risk-adjusted returns.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio has significant exposure to the Technology sector at 32.15%, followed by Financial Services at 12.63%, and Consumer Cyclicals at 12.42%. Other sectors like Healthcare, Communication Services, and Industrials also have notable allocations. This sector concentration can lead to higher volatility, especially during sector-specific downturns. Diversifying sector exposure can help mitigate sector-specific risks and improve overall portfolio stability. Consider reallocating funds to underrepresented sectors to achieve better diversification.

Regions Info

  • North America
    99%

Geographically, the portfolio is overwhelmingly concentrated in North America, which makes up 99.42% of the holdings. There is minimal exposure to other regions like Europe Developed, Latin America, and Asia Emerging. This geographic concentration exposes the portfolio to risks specific to the U.S. market. Diversifying into international equities can provide exposure to different economic cycles and reduce regional risk. A more globally diversified portfolio can offer better risk-adjusted returns.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Weighted yield (per year) 1.03%

The portfolio's dividend yield is not mentioned, but given its heavy allocation to growth stocks, the yield is likely low. Growth stocks typically reinvest earnings to fuel future growth rather than paying out dividends. While this strategy aims for capital appreciation, it lacks the steady income that dividends provide. To generate a more balanced return, consider adding dividend-paying stocks or funds. This can provide a steady income stream and reduce reliance on capital gains.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the low-cost ETFs it holds. The Schwab U.S. Large-Cap Growth ETF, Vanguard S&P 500 ETF, and Vanguard Total Stock Market Index Fund ETF Shares have very low expense ratios, which helps maximize net returns. Keeping investment costs low is crucial for long-term performance. While the current costs are minimal, always monitor for any changes in expense ratios. Consistently low costs contribute significantly to overall portfolio performance.

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