Growth-focused portfolio with heavy emphasis on technology and semiconductors
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
Growth Investors
This portfolio suits an investor with a high risk tolerance and a long-term investment horizon, who seeks aggressive growth primarily through equities. The ideal investor would be comfortable with significant fluctuations in portfolio value, banking on the high growth potential of the technology and semiconductor sectors. Such an investor would likely have a deep understanding of or strong belief in the sectors' long-term prospects, willing to weather short-term market volatility for potential long-term gains.
Positions
-
Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 80.00% -
VanEck Semiconductor ETF
SMH - US92189F6768 10.00% -
SPDR® S&P Semiconductor ETF
XSD - US78464A8624 10.00%
The portfolio is highly concentrated, with 80% allocated to the Schwab U.S. Large-Cap Growth ETF and 20% split evenly between two semiconductor ETFs. This composition indicates a strong tilt towards growth stocks, particularly within the technology sector. The heavy weighting in large-cap growth and semiconductors suggests an aggressive growth strategy, but it also introduces significant sector-specific risk, given the lack of diversification across other sectors and asset classes.
Growth
Historically, this portfolio has shown impressive growth with a Compound Annual Growth Rate (CAGR) of 19.72%. However, it has also experienced considerable volatility, as evidenced by a maximum drawdown of -37.42%. This level of performance volatility is typical for growth-oriented portfolios concentrated in technology and semiconductors, sectors known for their high growth potential but also for their susceptibility to market swings and sector-specific risks.
Projection
Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential portfolio values. The simulations forecast an annualized return of 27.37%, with a 50th percentile outcome showing significant growth. However, the wide spread between the 5th and 67th percentiles highlights the portfolio's high risk and potential for volatility. It's important to remember that these projections are hypothetical and do not guarantee future performance.
Asset classes
- Stocks 100%
- Cash 0%
The portfolio's assets are entirely in stocks, with no allocation to bonds, real estate, or other asset classes that could provide diversification benefits. This singular focus on equities, particularly within growth and technology sectors, maximizes potential returns but also increases risk, especially in market downturns when diversification across asset classes could mitigate losses.
Sectors
- Technology 59%
- Telecommunications 11%
- Consumer Discretionary 10%
- Health Care 7%
- Financials 6%
- Industrials 3%
- Consumer Staples 1%
- Basic Materials 1%
- Energy 1%
- Real Estate 0%
- Utilities 0%
With a dominant focus on technology (59%), followed by communication services and consumer cyclicals, the portfolio is positioned to benefit from growth in these dynamic sectors. However, this concentration also exposes the portfolio to sector-specific risks, such as regulatory changes or shifts in consumer preferences, which could disproportionately affect performance.
Regions
- North America 97%
- Asia Developed 2%
- Europe Developed 1%
The geographic allocation is heavily skewed towards North America (97%), with minimal exposure to developed markets in Asia and Europe. This concentration in the U.S. market leverages the growth potential of American tech giants but limits global diversification, potentially missing out on growth opportunities in other regions.
Market capitalization
- Mega-cap 56%
- Large-cap 25%
- Mid-cap 13%
- Small-cap 5%
- Micro-cap 1%
The portfolio's market capitalization breakdown shows a preference for mega (56%) and big (25%) cap stocks, aligning with its growth focus. While large-cap stocks tend to be more stable than their smaller counterparts, the portfolio's performance is closely tied to the fortunes of a relatively small number of large companies, which can be a double-edged sword.
Dividends
- Schwab U.S. Large-Cap Growth ETF 0.40%
- VanEck Semiconductor ETF 0.40%
- SPDR® S&P Semiconductor ETF 0.30%
- Weighted yield (per year) 0.39%
The portfolio generates a modest dividend yield, averaging 0.39%. While dividends are not the primary focus of a growth-oriented strategy, they provide a small cushion of income, which can be particularly beneficial during periods of flat or negative capital appreciation.
Ongoing product costs
- Schwab U.S. Large-Cap Growth ETF 0.04%
- VanEck Semiconductor ETF 0.35%
- SPDR® S&P Semiconductor ETF 0.35%
- Weighted costs total (per year) 0.10%
The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.10%. Keeping costs low is crucial for maximizing long-term returns, especially in a growth-focused portfolio where the compounding effect of high fees can significantly erode potential gains over time.
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.
While the portfolio shows strong past performance and growth potential, its heavy concentration in technology and semiconductors, coupled with a lack of diversification across asset classes and geographies, suggests room for optimization. Utilizing the Efficient Frontier concept could help identify a more diversified asset allocation that achieves a better risk-return trade-off, potentially enhancing returns while reducing volatility.
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