A tech-heavy growth portfolio with concentrated exposure to large-cap US equities

Report created on Jan 3, 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 is heavily concentrated in large-cap US equities, with 50% in the Vanguard S&P 500 ETF, 30% in the Invesco NASDAQ 100 ETF, and 20% in the Schwab U.S. Large-Cap Growth ETF. This structure leans towards growth-focused investments, primarily in the technology sector. While this composition may benefit from potential high returns, it lacks diversification across asset classes and regions. To align with common benchmarks, consider incorporating a mix of small-cap stocks, international equities, or bonds to enhance diversification and reduce risk exposure.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 15.84%, indicating robust growth potential. However, it also experienced a significant maximum drawdown of -29.43%, highlighting its volatility. This performance suggests the portfolio is well-suited for investors willing to accept higher risk for the possibility of substantial returns. Comparing to benchmarks, such as the S&P 500, this performance is commendable, but it's crucial to remember that past performance is not indicative of future results.

Projection Info

Monte Carlo simulations, which use historical data to project potential future outcomes, suggest a wide range of possible results for this portfolio. The median outcome shows a promising 680.63% growth, with a high probability of positive returns. However, relying solely on historical data can be misleading, as it doesn't account for future market changes. Diversifying the portfolio could help mitigate risks and improve consistency in achieving desired outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash position. This lack of asset class diversification increases vulnerability to market fluctuations. Including other asset classes, such as bonds or real estate, could provide more stability and reduce overall risk. A balanced allocation across various asset classes is generally recommended to align with common benchmarks and improve risk management.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    12%
  • Telecommunications
    12%
  • Health Care
    9%
  • Financials
    8%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The portfolio is heavily weighted towards technology, comprising 41.31% of the total allocation. While this sector has driven significant growth, it also introduces higher volatility, especially during interest rate hikes or regulatory changes. To achieve a more balanced sectoral distribution, consider reallocating some investments to underrepresented sectors like utilities or real estate, which can provide stability during market downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With nearly 99% of assets in North America, the portfolio lacks geographic diversification, which can increase susceptibility to regional economic downturns. Expanding exposure to other regions, such as Europe or Asia, could enhance diversification and reduce risk. By aligning with global benchmarks, the portfolio could capture growth opportunities in emerging markets and mitigate regional risks.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Schwab U.S. Large-Cap Growth ETF and the Invesco NASDAQ 100 ETF. High correlation limits diversification benefits, as these assets tend to move in tandem. By replacing some of these correlated investments with less correlated ones, the portfolio can achieve better risk management and increased 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 could benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. By adjusting the allocation between existing assets, investors can potentially achieve a more balanced risk-return profile. This optimization doesn't necessarily mean adding new assets but rather fine-tuning the current mix to maximize efficiency.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.86%

The portfolio has a modest dividend yield of 0.86%, primarily driven by the Vanguard S&P 500 ETF. While dividend income can provide a steady cash flow, the focus here is on growth rather than income generation. For investors seeking higher income, incorporating higher-yielding assets could be beneficial. However, the current yield aligns with the growth-oriented strategy of the portfolio.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, supporting better long-term performance by minimizing costs. This low-cost structure is a positive aspect, as high fees can erode returns over time. Maintaining a focus on cost-effective investments, such as ETFs, ensures that more of the portfolio's gains are retained, enhancing overall performance.

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