A growth-oriented portfolio with high concentration in US equities and technology sector
Report created on Jan 14, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 86.14% -
VG Vanguard Information Technology Index Fund ETF Shares
VGT - US92204A7028 13.86%
The portfolio is heavily concentrated in two ETFs, with the Vanguard S&P 500 ETF making up over 86% and the Vanguard Information Technology Index Fund ETF around 14%. This composition focuses on US large-cap stocks, emphasizing a growth strategy. While this may align with a growth profile, the lack of diversification can pose risks. A more diversified portfolio typically includes a mix of asset classes like bonds or international stocks to balance risk. Consider diversifying by adding other asset classes to reduce the reliance on US equities.
Growth
Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.08%. This suggests strong growth, primarily driven by the US stock market. However, the maximum drawdown of -33.57% indicates vulnerability during market downturns. Comparing this to benchmarks, the portfolio's performance aligns with typical US equity growth patterns but may be more volatile. It's important to remember that past performance doesn't guarantee future returns. Consider strategies to mitigate potential downturns, such as diversification or hedging.
Projection
The Monte Carlo simulation projects potential future outcomes based on historical data, with 1,000 simulations showing an annualized return of 19.45%. The 5th percentile outcome suggests a possible 186.74% return, while the median (50th percentile) is 862.1%. This wide range reflects market uncertainties. While these projections are optimistic, they rely on past data, which may not predict future events. It's wise to use these insights cautiously, maintaining flexibility to adapt to changing market conditions.
Asset classes
- Stocks 100%
The portfolio is almost entirely allocated to stocks, with a negligible cash position. Such concentration in a single asset class can lead to higher volatility and risk, especially during market downturns. In contrast, diversified portfolios often include bonds or alternative assets to stabilize returns. By incorporating other asset classes, you can potentially reduce risk and enhance long-term performance. Consider introducing fixed income or alternative investments to achieve a more balanced asset allocation.
Sectors
- Technology 42%
- Financials 11%
- Health Care 10%
- Consumer Discretionary 9%
- Telecommunications 8%
- Industrials 7%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
The portfolio is heavily weighted towards the technology sector, comprising over 42% of the total allocation. While this can drive growth in booming tech markets, it also increases exposure to sector-specific risks, such as regulatory changes or tech downturns. Compared to common benchmarks, this concentration may lead to higher volatility. Diversifying across more sectors can help mitigate these risks. Consider reallocating some investments to underrepresented sectors to achieve a more balanced sectoral exposure.
Regions
- North America 99%
- Europe Developed 1%
With over 99% of assets in North America, the portfolio lacks geographic diversification. This heavy reliance on the US market exposes it to regional economic risks and limits potential growth opportunities in emerging or developed markets outside North America. Compared to global benchmarks, this concentration is significantly higher. Diversifying geographically can help reduce risk and tap into growth in other regions. Consider increasing exposure to international markets for a more globally balanced portfolio.
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 may benefit from optimization using the Efficient Frontier concept, which seeks the best risk-return balance. Currently, the portfolio's concentration in US equities and technology may not fully exploit diversification benefits. The Efficient Frontier can help identify an asset mix that maximizes returns for a given risk level. Consider adjusting allocations within existing assets to improve efficiency, potentially enhancing returns without increasing risk. This approach focuses on optimizing the current asset mix rather than seeking new investments.
Dividends
- Vanguard Information Technology Index Fund ETF Shares 0.60%
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.20%
The portfolio's overall dividend yield is 1.2%, driven by the Vanguard S&P 500 ETF's 1.3% yield and the Vanguard Information Technology Index Fund ETF's 0.6% yield. This yield is relatively modest, reflecting the growth-oriented focus. Dividends can provide a steady income stream and cushion against market volatility. For investors seeking income, higher-yielding assets could be considered. Evaluate whether increasing the allocation to dividend-paying stocks aligns with your investment goals.
Ongoing product costs
- Vanguard Information Technology Index Fund ETF Shares 0.10%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.04%
The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of just 0.04%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low fees are advantageous, especially in a growth-focused portfolio where compounding can significantly enhance wealth accumulation over time. Maintaining this low-cost structure is beneficial. Regularly review fee structures to ensure they remain competitive and continue to support your financial objectives.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey