Growth-focused portfolio with high U.S. exposure and low diversification across sectors.

Report created on Dec 6, 2024

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 U.S. equities, with a dominant 56% allocation to the Vanguard Total Stock Market Index Fund ETF. The remaining allocations include the Schwab U.S. Dividend Equity ETF at 21%, Schwab U.S. Large-Cap Growth ETF at 14%, and VanEck Semiconductor ETF at 7%. This composition indicates a strong focus on growth through large-cap U.S. stocks. The concentration in a few ETFs suggests limited diversification, which could increase risk during market downturns. Consider diversifying by adding different asset classes or international equities to balance the portfolio and reduce risk.

Growth Info

Historically, the portfolio has shown a strong compound annual growth rate (CAGR) of 15.27%, indicating robust past performance. However, it's important to note that historical performance does not guarantee future results. The maximum drawdown of 33.66% reflects significant volatility, which could be concerning for investors with low risk tolerance. To mitigate potential losses, consider incorporating more defensive assets that could provide stability during market downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns, with a 50th percentile end value of 894.2%. This indicates the possibility of substantial growth but also highlights the inherent uncertainty in projections. While the simulation shows a high likelihood of positive returns, it's crucial to remember that these are hypothetical scenarios and not predictions. Regularly reviewing and adjusting the portfolio can help align it with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in equities, with 99.85% in stocks and a negligible cash position. This heavy equity focus can offer substantial growth potential, but it also increases exposure to market volatility. Diversifying into other asset classes, such as bonds or real estate, could provide a buffer against market fluctuations and enhance the portfolio's risk-adjusted returns. Consider rebalancing to include a mix of asset classes that aligns with your risk tolerance and investment objectives.

Sectors Info

  • Technology
    34%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation reveals a significant concentration in technology, representing 34% of the portfolio. While this sector has driven strong growth, its volatility can be high. Other sectors, like financial services and healthcare, are also represented but to a lesser extent. To mitigate sector-specific risks, consider increasing exposure to underrepresented sectors, such as consumer defensives or utilities, which can offer stability during economic downturns and provide more balanced growth.

Regions Info

  • North America
    98%
  • Asia Developed
    1%
  • Europe Developed
    1%

The portfolio's geographic allocation is heavily skewed towards North America, with 98% exposure. This concentration limits diversification and increases vulnerability to regional economic downturns. While North American markets have historically performed well, consider adding international equities to gain exposure to different economic cycles and growth opportunities. Diversifying geographically can reduce risk and enhance potential returns by tapping into emerging markets and developed economies outside the U.S.

Redundant positions Info

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

The portfolio includes highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund ETF and the Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move in the same direction, offering limited diversification benefits. To improve risk management, consider replacing or reducing exposure to overlapping assets and incorporating investments with lower correlation. This can help smooth out returns and reduce the impact of market volatility on the portfolio.

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 can potentially be optimized using the Efficient Frontier, which helps find the best risk-return ratio. By adjusting the current allocation, you can aim for a more efficient portfolio. This involves analyzing the trade-offs between risk and return and reallocating funds among existing assets to achieve a more balanced approach. Keep in mind that optimization doesn't necessarily mean adding new assets but rather tweaking the current mix to enhance performance while managing risk.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 2.50%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.29%

The portfolio's dividend yield stands at 1.29%, with the Schwab U.S. Dividend Equity ETF contributing the most at 2.5%. While dividends provide a steady income stream, the overall yield is relatively modest. For investors seeking higher income, consider reallocating some funds to higher-yielding assets. However, balancing yield with growth potential is crucial, as excessively high yields can sometimes indicate increased risk. Diversifying dividend sources can enhance income stability.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your investment's returns are retained. However, the VanEck Semiconductor ETF has a higher expense ratio of 0.35%, which could be a drag on performance over time. Consider evaluating whether the higher costs of certain ETFs are justified by their potential returns. Reducing expenses can significantly impact the portfolio's growth over the long term.

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