A growth-focused portfolio with high U.S. exposure and tech-heavy sector concentration

Report created on Apr 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio comprises three prominent ETFs: Invesco NASDAQ 100 ETF at 50%, SPDR S&P 500 ETF Trust at 25%, and Vanguard Total Stock Market Index Fund ETF Shares at 25%. This composition heavily leans towards U.S. equities, with a significant emphasis on large-cap stocks. Compared to a typical diversified portfolio, this one is more concentrated, which can lead to higher volatility. To enhance diversification, consider including international or alternative asset classes.

Growth Info

Historically, the portfolio has achieved a commendable CAGR of 12.53%, which is a strong performance indicator. However, it has also experienced a significant maximum drawdown of -29.83%, reflecting its higher risk nature. Compared to benchmarks, this performance is consistent with a growth-oriented strategy. While past performance is promising, it should not be the sole basis for future expectations. Regularly reviewing performance against benchmarks can help identify areas for improvement.

Projection Info

The Monte Carlo simulation, which uses historical data to estimate future outcomes, projects a median portfolio growth of 376.1% over the investment horizon. While 968 out of 1,000 simulations show positive returns, it's important to note that such simulations are based on past data and can't predict future results with certainty. As market conditions change, it's crucial to revisit these projections and adjust the portfolio as needed to align with evolving goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely allocated to stocks, lacking diversity across asset classes. While this can lead to higher potential returns, it also increases exposure to market volatility. Asset class diversification, such as including bonds or real assets, can mitigate risk and smooth returns over time. Comparing with diversified benchmarks, the portfolio might benefit from a more balanced allocation to enhance stability during market fluctuations.

Sectors Info

  • Technology
    41%
  • Telecommunications
    13%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Financials
    7%
  • Industrials
    6%
  • Consumer Staples
    6%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

A notable 41% of the portfolio is concentrated in the technology sector, followed by communication services and consumer cyclicals. This concentration can lead to higher volatility, especially during periods of technological market corrections. While sector allocation aligns with recent growth trends, it's essential to monitor sector performance and consider rebalancing if necessary to avoid overexposure. Diversifying into underrepresented sectors could provide more stability.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

With 98% of the portfolio's assets allocated to North America, geographic diversification is limited. This heavy reliance on the U.S. market could expose the portfolio to regional economic downturns. Expanding into international markets, particularly emerging economies, could enhance diversification and reduce geographic-specific risks. Comparing to global benchmarks, increasing non-U.S. exposure may offer additional growth opportunities and risk mitigation.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    34%
  • Mid-cap
    15%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is predominantly composed of mega and large-cap stocks, accounting for 82% of the allocation. While large-cap stocks provide stability and consistent growth, the portfolio might miss out on the higher growth potential of small-cap stocks. Including a mix of small and mid-cap stocks could enhance growth opportunities and diversification. Balancing market capitalization exposure can help in achieving a more comprehensive risk-return profile.

Redundant positions Info

  • SPDR S&P 500 ETF Trust
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The SPDR S&P 500 ETF Trust and Vanguard Total Stock Market Index Fund ETF Shares are highly correlated, offering limited diversification benefits. Highly correlated assets tend to move in tandem, which can amplify losses during downturns. To improve diversification, consider incorporating assets with lower correlation, such as international equities or bonds. Reducing correlation can enhance the portfolio's resilience against market volatility.

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's current asset allocation may not lie on the Efficient Frontier, which represents the best possible risk-return ratio. By optimizing the allocation, you can potentially achieve a more favorable balance between risk and return. This involves adjusting the weights of existing assets to align with the Efficient Frontier. It's important to note that optimization is based solely on current assets and does not guarantee diversification or other investment goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • SPDR S&P 500 ETF Trust 1.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 0.98%

With a total dividend yield of 0.98%, the portfolio provides modest income. While growth-focused portfolios typically prioritize capital appreciation over dividends, a balanced approach could enhance overall returns. Dividend-paying stocks can offer stability during volatile markets and provide a steady income stream. Evaluating dividend yields in relation to growth goals can help in optimizing the portfolio's income potential.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is low at 0.11%, which is advantageous for long-term performance. Lower costs mean more of your returns are retained, enhancing compounding over time. Compared to industry averages, this cost structure is commendable and aligns with best practices in cost management. Maintaining a low-cost portfolio is crucial for maximizing net returns, especially over extended investment horizons.

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