A heavily concentrated US equity portfolio with low diversification and moderate growth potential

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking moderate growth with a balanced risk tolerance and a long-term horizon. It emphasizes large-cap US equities, providing stability and potential for steady returns. However, the low diversification suggests it's ideal for someone comfortable with sector and geographic concentration, willing to accept volatility for potential growth. It's well-suited for those looking to capitalize on US market performance while maintaining a focus on cost efficiency.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    87.56%
  • iShares Russell Top 200 Growth ETF
    IWY - US4642894384
    8.24%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    4.20%

The portfolio is heavily concentrated in US equities, with a significant 87.56% allocation to the iShares Core S&P 500 ETF. This suggests a focus on large-cap stocks, which can provide stability but may limit exposure to other growth opportunities. While this composition aligns with a balanced profile, the lack of diversification could expose the portfolio to sector-specific risks. Consider diversifying into other asset classes to balance potential risks and returns better.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.29%. This suggests strong historical growth, outperforming many benchmarks. However, the maximum drawdown of -33.55% indicates significant volatility during downturns. While past performance is promising, it doesn't guarantee future results. It's crucial to prepare for potential fluctuations by considering more diversified investments or protective strategies.

Projection Info

Using Monte Carlo simulations, the portfolio shows a median potential return of 579.55%, with 996 out of 1,000 simulations yielding positive returns. This indicates a high probability of growth, but it's essential to understand that these projections are based on historical data and assumptions. They provide a range of possible outcomes, not certainties. To enhance potential outcomes, consider adjusting asset allocations to optimize for risk and return.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly allocated to stocks, with 99.73% in equities and a negligible 0.27% in cash. While equities can drive growth, this concentration may increase volatility. A more balanced allocation across different asset classes, such as bonds or real estate, could provide stability and reduce risk. Diversifying asset classes can enhance the portfolio's resilience during market fluctuations.

Sectors

  • Technology
    34%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is tech-heavy, with 33.99% in technology, followed by financial services and consumer cyclicals. This concentration in a few sectors may lead to higher volatility, especially during economic shifts or interest rate changes. Diversifying across more sectors can mitigate these risks and provide a buffer against sector-specific downturns, aligning with a balanced investment approach.

Regions

  • North America
    99%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%

With 99.49% exposure to North America, the portfolio is highly concentrated geographically, limiting global diversification benefits. This focus may miss opportunities in emerging or developed markets outside the US. To enhance diversification, consider increasing exposure to international markets, which can provide growth opportunities and reduce regional risk.

Dividends

  • iShares Core S&P 500 ETF 0.90%
  • iShares Russell Top 200 Growth ETF 0.30%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Weighted yield (per year) 0.96%

The portfolio's overall dividend yield is 0.96%, with the Schwab U.S. Dividend Equity ETF contributing the most at 3.6%. While dividends can provide a steady income stream, the overall yield is relatively low. If income is a priority, consider increasing allocations to higher-yielding assets. However, ensure this aligns with your broader investment goals and risk tolerance.

Ongoing product costs

  • iShares Core S&P 500 ETF 0.03%
  • iShares Russell Top 200 Growth ETF 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term growth by minimizing costs. Low fees mean more of your returns stay in your pocket. This efficient cost structure supports better performance over time. Regularly review and compare costs to ensure they remain competitive, especially if considering changes to asset allocations.

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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best risk-return ratio. This involves adjusting the current asset allocations to achieve a more balanced risk and return profile. While efficiency doesn't guarantee diversification, it can help in maximizing returns for a given level of risk. Consider consulting with a financial advisor to explore optimization strategies.

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