Balanced Growth Portfolio with Strong Technology Focus and High Potential Returns

Report created on Jul 6, 2024

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 composed of four ETFs, predominantly focusing on U.S. equities. The Vanguard Total Stock Market Index Fund ETF holds the largest share at 44.45%, followed by the Invesco NASDAQ 100 ETF at 33.33%. The VanEck Semiconductor ETF and Vanguard Total International Stock Index Fund ETF Shares each hold 11.11%. This composition leans heavily towards technology and U.S. stocks, reflecting a growth-oriented strategy. While this provides significant growth potential, it also suggests a need for diversification to mitigate risk, particularly in times of market volatility.

Growth Info

Historically, the portfolio has shown impressive performance with a CAGR of 16.66%. However, it experienced a maximum drawdown of -31.41%, indicating periods of significant volatility. This performance suggests that while the portfolio has delivered strong returns, the associated risk is also considerable. Investors should be aware of the potential for substantial fluctuations in value. To maintain these returns while managing risk, consider strategies that could reduce drawdowns, such as incorporating more diverse asset classes or sectors.

Projection Info

Using a Monte Carlo simulation, which models the probability of different outcomes in financial markets, the portfolio shows promising future potential. With a hypothetical initial investment, the simulation's median projection is a 762.11% return, with a 67th percentile outcome reaching 1,137.94%. This suggests a high likelihood of positive returns, with 992 out of 1,000 simulations showing gains. While these projections are optimistic, it's crucial to remember that they are based on historical data and assumptions, which may not guarantee future performance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.72% of the total allocation. This high concentration in equities aligns with a growth-focused investment strategy, which can offer substantial returns but also comes with increased risk. The minimal allocation to cash and other assets suggests limited diversification. To enhance stability and reduce risk, consider introducing other asset classes, such as bonds or real estate, which can provide balance and mitigate market volatility.

Sectors Info

  • Technology
    43%
  • Consumer Discretionary
    10%
  • Telecommunications
    10%
  • Financials
    8%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is dominated by technology, making up 43.25% of the total. Other sectors, such as consumer cyclicals and communication services, also have notable allocations. While this concentration in technology can drive growth, it exposes the portfolio to sector-specific risks. Diversifying across a broader range of sectors could help reduce volatility and enhance resilience during sector downturns. Consider evaluating the potential of underrepresented sectors to create a more balanced approach.

Regions Info

  • North America
    87%
  • Europe Developed
    6%
  • Asia Developed
    3%
  • Asia Emerging
    2%
  • Japan
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America, with 86.56% of assets allocated there. This focus on U.S. equities aligns with the growth strategy but limits exposure to international markets. While the portfolio includes some investments in Europe, Asia, and other regions, these allocations are relatively small. Expanding geographic diversification can help mitigate risks associated with regional economic downturns and capture growth opportunities in emerging markets.

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 optimization chart suggests potential for improvement by adjusting along the efficient frontier. Investors can achieve a riskier portfolio by increasing allocation to high-growth sectors or reducing risk by incorporating more conservative asset classes like bonds. Before optimizing, focus on enhancing diversification across sectors and geographies to balance growth and stability. Analyzing historical performance and future projections can guide adjustments that align with financial goals and risk tolerance, ensuring a more resilient and efficient portfolio.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.11%

The portfolio's dividend yield stands at 1.11%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. While the dividend income is modest, it provides a steady stream of cash flow that can be reinvested or used for other purposes. To enhance income generation, consider increasing exposure to dividend-focused investments. Balancing growth with income can create a more robust portfolio that benefits from both capital appreciation and regular income.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is relatively low at 0.11%, with the Vanguard Total Stock Market Index Fund ETF having the lowest cost at 0.03%. Low costs are advantageous as they minimize the drag on returns. Keeping costs low is crucial for maximizing net returns over time. Regularly reviewing and optimizing the cost structure can ensure that the portfolio remains efficient. Consider maintaining a focus on low-cost investments to enhance long-term performance and preserve more of the portfolio's gains.

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