A growth-focused portfolio with strong tech presence and moderate geographic diversification

Report created on Jan 18, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a notable focus on growth-oriented ETFs and stocks. This composition aligns with a growth strategy, targeting capital appreciation over time. Compared to a balanced portfolio, which might include bonds and other asset classes, this portfolio is more aggressive. While this can lead to higher returns, it also implies increased volatility. To align with broader benchmarks, consider introducing more asset classes like bonds or real estate, which can help reduce risk and enhance diversification.

Growth Info

Historically, the portfolio has delivered an impressive compound annual growth rate (CAGR) of 19.49%. This indicates strong past performance, particularly in growth markets. However, the max drawdown of -50.02% highlights its vulnerability during market downturns. This level of volatility is typical for growth-focused portfolios, which tend to outperform in bull markets but suffer in bear markets. It's essential to consider this risk and ensure it aligns with your risk tolerance and financial goals. Diversifying into more defensive assets could help mitigate future drawdowns.

Projection Info

Forward projections based on Monte Carlo simulations suggest a wide range of potential outcomes, with an annualized return of 19.16%. The simulations, which use historical data to predict future performance, show a 5th percentile return of 53.82% and a 67th percentile return of 1,085.18%. While these projections are promising, it's crucial to remember that they rely on past data and assumptions, which may not hold in the future. Consider these projections as one of many tools to guide your investment decisions, rather than a guarantee of future success.

Asset classes Info

  • Stocks
    100%

The asset allocation is overwhelmingly skewed towards stocks, representing nearly 100% of the portfolio. Such a concentration is typical of growth-oriented portfolios that aim for high returns. However, it limits diversification benefits that other asset classes, like bonds or commodities, might provide. This allocation can lead to significant volatility. To reduce risk, consider reallocating a portion of the portfolio to other asset classes. Doing so can help cushion against equity market downturns and provide more stable returns over time.

Sectors Info

  • Technology
    37%
  • Telecommunications
    21%
  • Consumer Discretionary
    17%
  • Financials
    7%
  • Health Care
    6%
  • Industrials
    3%
  • Consumer Staples
    3%
  • Consumer Discretionary
    2%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in technology, communication services, and consumer cyclicals, which together make up over 75% of the allocation. This concentration can drive significant growth during tech booms but also increase vulnerability to sector-specific downturns. A more balanced sector allocation could help reduce risk. Consider increasing exposure to less represented sectors like healthcare or financials, which might provide stability and counterbalance the volatility inherent in tech-heavy portfolios.

Regions Info

  • North America
    94%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly invested in North America, with over 94% exposure. This provides familiarity and stability but limits the benefits of global diversification. Exposure to international markets can offer growth opportunities and reduce geographic-specific risks. Consider increasing investments in other regions, such as Europe or Asia, to enhance diversification. This could help mitigate risks associated with economic or political events specific to North America, providing a more balanced global exposure.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard High Dividend Yield Index Fund ETF Shares
    Vanguard Dividend Appreciation Index Fund ETF Shares
    High correlation

The portfolio contains several highly correlated assets, particularly among the Vanguard ETFs. High correlation means these assets tend to move in the same direction, which can reduce diversification benefits. During market downturns, this lack of diversification might result in larger losses. To improve diversification, consider replacing some of these correlated assets with others that have lower correlation. This adjustment could help stabilize returns and reduce overall portfolio risk, particularly during volatile market conditions.

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.

To optimize risk versus return, consider focusing on the Efficient Frontier, which represents the best possible risk-return ratio for a given set of assets. Currently, the portfolio could benefit from reducing overlap among highly correlated assets, which do not enhance diversification. By reallocating assets along the Efficient Frontier, you can potentially achieve better returns for the same level of risk. This process involves adjusting the weights of existing assets to find the most efficient allocation, enhancing overall portfolio performance.

Dividends Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.40%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 0.63%

The portfolio's dividend yield is relatively low at 0.63%, reflecting its focus on growth rather than income. Dividend-paying stocks can provide a steady income stream, which can be particularly valuable during market downturns. While growth stocks often reinvest earnings to fuel expansion, incorporating more dividend-paying assets might enhance income stability. If income generation is a goal, consider increasing allocation to higher-yielding stocks or funds, which can provide more consistent returns and complement the growth strategy.

Ongoing product costs Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.07%
  • T. ROWE PRICE GROWTH STOCK FUND INC. T. ROWE PRICE GROWTH STOCK FUND INC. 0.65%
  • First Trust Cloud Computing ETF 0.60%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is 0.21%, which is relatively low and advantageous for long-term growth. Low costs mean more of your investment returns stay in your pocket, rather than going towards fees. This aligns well with best practices for cost-efficient investing. However, the T. Rowe Price Growth Stock Fund has a higher expense ratio of 0.65%, which might be worth reviewing. Consider whether lower-cost alternatives could achieve similar exposure, potentially enhancing net returns over time.

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