High-growth portfolio with strong tech focus and limited international exposure

Report created on Dec 11, 2024

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.

Positions

This portfolio is heavily weighted towards growth-oriented ETFs, primarily focusing on large-cap U.S. equities. The composition includes a significant allocation to technology stocks, indicating a preference for sectors with high growth potential. Such a structure suggests the portfolio aims to capitalize on the rapid growth of tech companies. While this can lead to impressive gains during market upswings, it also exposes the portfolio to heightened volatility. To manage risk, consider introducing more diversified assets that can provide stability during downturns.

Growth Info

Historically, this portfolio has demonstrated strong performance with a compound annual growth rate (CAGR) of 17.21%. This impressive growth rate reflects the portfolio's focus on high-performing sectors like technology. However, the maximum drawdown of -32.25% highlights its vulnerability during market corrections. While past performance can provide insights, it is not a guarantee of future returns. Investors should remain cautious and consider strategies to mitigate potential losses, such as diversifying into less volatile asset classes.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future performance, shows a wide range of potential outcomes. The median projection indicates a significant potential growth, with a 50th percentile end value of 867.88%. While these simulations can offer valuable insights, they rely on historical trends and assumptions that may not hold true in the future. It's important to use these projections as a guide rather than a definitive forecast, considering various scenarios and adjusting the portfolio to align with personal risk tolerance and goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely invested in stocks, with a negligible cash position. This heavy reliance on equities can lead to substantial growth but also increases exposure to market volatility. Diversification across different asset classes, such as bonds or real estate, can help balance risk and provide more stable returns. By incorporating a mix of asset classes, investors can potentially reduce the impact of market fluctuations and achieve a more consistent performance over time.

Sectors Info

  • Technology
    53%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Health Care
    7%
  • Financials
    7%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    1%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

With over half of the portfolio allocated to technology, there's a significant sector concentration. This focus can drive high returns in a booming tech market but also increases vulnerability to sector-specific downturns. A well-rounded portfolio typically includes a mix of sectors to spread risk and capture growth from various parts of the economy. Consider reallocating funds to underrepresented sectors like healthcare or consumer defensives to improve balance and reduce reliance on a single industry.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is overwhelmingly concentrated in North America, limiting exposure to international markets. This lack of geographic diversification can increase vulnerability to regional economic downturns. By expanding into more global markets, investors can tap into growth opportunities in emerging economies and reduce risk through diversification. Consider adding international equities or funds that provide exposure to Europe, Asia, and other regions to enhance global diversification.

Redundant positions Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    Vanguard S&P 500 ETF
    Vanguard S&P 500 Growth Index Fund ETF Shares
    High correlation

The portfolio's assets are highly correlated, meaning they tend to move in tandem. This lack of diversification can amplify risk, as all assets may decline simultaneously during market downturns. Reducing correlation by diversifying across different asset classes, sectors, or geographies can help manage risk and improve the portfolio's overall resilience. Consider introducing assets with low correlation to the existing holdings to achieve a more balanced risk-return profile.

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 could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This involves reallocating investments to achieve a more efficient balance between risk and return. Before optimizing, focus on reducing highly correlated assets that offer little diversification benefit. By adjusting the allocation among existing holdings, you can potentially enhance performance and better align with your risk tolerance and investment objectives.

Dividends Info

  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.60%
  • Weighted yield (per year) 0.78%

The portfolio's dividend yield is relatively low at 0.78%, reflecting its focus on growth stocks rather than income generation. While growth stocks can offer substantial capital appreciation, dividends provide a steady income stream and can enhance total returns. To increase income potential, consider incorporating dividend-paying stocks or ETFs that focus on companies with a history of stable and growing dividends. This can provide a buffer during market volatility and contribute to long-term wealth accumulation.

Ongoing product costs Info

  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is low at 0.07%, which is advantageous for long-term growth. Lower costs mean more of your investment returns stay in your pocket, compounding over time. While the current expenses are minimal, always remain vigilant about fees, as they can erode returns over time. Regularly review and compare the costs of your investments to ensure they remain competitive and aligned with your financial goals.

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