A growth-focused portfolio with strong US exposure and moderate diversification

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of six ETFs, with a significant 50% allocation to the Vanguard S&P 500 ETF, emphasizing large-cap US equities. Smaller allocations to technology and semiconductor sectors, along with international stocks, provide some diversification. Compared to a typical growth portfolio, this allocation is moderately diversified but leans heavily on US equities. Balancing growth with a focus on large-cap stability, this composition offers a solid foundation for those seeking capital appreciation. Consider reviewing the balance between US and international equities to enhance global diversification.

Growth Info

Historically, this portfolio has demonstrated a strong performance with a Compound Annual Growth Rate (CAGR) of 14.45%. This indicates robust growth, outpacing many benchmarks over similar periods. However, it also experienced a significant maximum drawdown of -34.21%, highlighting its vulnerability during market downturns. While past performance is a good indicator of potential, it's not a guarantee of future results. To mitigate future risks, consider strategies to reduce volatility, such as diversifying into defensive sectors or increasing cash reserves.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a range of potential portfolio returns. With 1,000 simulations, the median outcome shows a substantial 474.56% increase, while the 5th percentile projects a 42.77% gain. These projections highlight the portfolio's potential for significant growth, albeit with some risk. It's crucial to remember that these are hypothetical scenarios and not guarantees. Regularly reviewing and adjusting the portfolio to align with changing market conditions can help manage risks and capitalize on opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, with 99.68% allocated to equities. This high equity exposure is typical for growth-oriented portfolios but may limit diversification benefits. A more balanced allocation across different asset classes, such as bonds or real estate, could provide a buffer against stock market volatility. While equities offer higher growth potential, diversifying into other asset classes can help stabilize returns and reduce overall portfolio risk.

Sectors Info

  • Technology
    33%
  • Energy
    13%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Industrials
    6%
  • Utilities
    4%
  • Real Estate
    3%
  • Basic Materials
    2%

The portfolio has a notable concentration in the technology sector, comprising 33.30% of the total allocation. Such concentration can lead to higher volatility, especially during periods of tech sector underperformance. Other sectors like energy and financial services are also represented but to a lesser extent. Balancing sector allocations can help mitigate sector-specific risks. Consider adding exposure to sectors less correlated with technology, such as consumer staples or healthcare, to enhance stability and reduce risk.

Regions Info

  • North America
    88%
  • Europe Developed
    5%
  • Asia Developed
    2%
  • Asia Emerging
    2%
  • Japan
    2%
  • Australasia
    1%

With 88.06% of the portfolio's assets allocated to North America, there is a significant geographic concentration. This heavy US exposure can limit the benefits of international diversification, potentially increasing vulnerability to regional economic downturns. While US markets have historically performed well, diversifying into other regions can provide exposure to different growth opportunities and reduce risk. Consider increasing allocations to emerging markets or developed regions outside North America to enhance diversification.

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 risk-return profile can be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. This involves adjusting allocations among existing assets to achieve a balance that maximizes returns for a given level of risk. While this approach doesn't guarantee diversification or specific returns, it provides a framework for improving efficiency. Consider using optimization tools to explore potential allocation changes that align with your risk tolerance and investment objectives.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Invesco S&P 500® High Dividend Low Volatility ETF 3.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Energy Select Sector SPDR® Fund 3.30%
  • Weighted yield (per year) 1.70%

The portfolio's overall dividend yield is 1.7%, with notable contributions from the Invesco S&P 500 High Dividend Low Volatility ETF and the Vanguard Total International Stock Index Fund. While growth portfolios typically focus on capital appreciation, dividends can provide a consistent income stream and enhance total returns. For investors seeking income, increasing exposure to high-dividend-paying assets may be beneficial. However, this should be balanced with growth objectives to maintain the portfolio's overall strategy.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Invesco S&P 500® High Dividend Low Volatility ETF 0.30%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Energy Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, which is impressively low and supports better long-term performance by minimizing costs. Low costs are a significant advantage, as they enhance net returns over time. However, it's essential to monitor individual fund fees and consider replacing higher-cost funds with lower-cost alternatives if they align with your investment strategy. Regularly reviewing costs ensures that the portfolio remains cost-efficient and aligned with your financial goals.

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