A growth-focused portfolio with high tech concentration and limited geographic diversity

Report created on Jan 4, 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 weighted towards equities, with a significant portion in ETFs and major tech stocks. With 35.75% in the Vanguard S&P 500 ETF and 19.25% in the Total Stock Market ETF, it mirrors broad market indices. This composition aligns with a growth strategy but lacks diversification across asset classes. A typical balanced portfolio may include bonds or alternative investments to mitigate risk. Consider diversifying further to manage potential downturns more effectively.

Growth Info

Historically, this portfolio has delivered impressive results, with a compound annual growth rate (CAGR) of 28.75%. However, it also experienced a significant maximum drawdown of -57.94%, indicating high volatility. While past performance suggests strong returns, it's essential to remember that prior results don't guarantee future outcomes. Comparing this to benchmarks can help assess performance consistency over time. Diversifying could help reduce potential drawdowns in the future.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, the portfolio shows promising future growth. The median simulation predicts a 4,173.68% increase. However, these projections are not guarantees, and actual results may vary. The simulations highlight the portfolio's growth potential but also underscore the importance of risk management. Regularly reviewing and adjusting your portfolio can help navigate market changes and maintain alignment with your goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash allocation. This heavy equity focus can drive growth but also increases risk, especially during market downturns. A more balanced allocation might include bonds or other asset classes to provide stability. Diversifying into different asset types could help manage volatility and smooth out returns over time.

Sectors Info

  • Technology
    48%
  • Consumer Discretionary
    20%
  • Financials
    7%
  • Health Care
    6%
  • Telecommunications
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology dominates the portfolio at 48%, with significant holdings in consumer cyclicals and financial services. This concentration can lead to higher volatility, especially if tech experiences a downturn. A more balanced sector allocation would typically include more exposure to defensive sectors like utilities or consumer staples. Adjusting sector weights could help reduce risk and improve resilience against economic shifts.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is overwhelmingly North American at 99.7%, with minimal international diversification. This lack of global exposure can increase vulnerability to regional economic downturns. A more geographically diverse portfolio might include greater allocations to Europe, Asia, and emerging markets. Expanding geographic diversity can enhance resilience and capture growth opportunities in different regions.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly the Vanguard S&P 500 ETF and the Total Stock Market ETF. High correlation means these assets tend to move together, limiting diversification benefits. Reducing overlap by choosing less correlated assets can enhance diversification and potentially improve risk-adjusted returns. Consider exploring different ETFs or funds that provide unique exposure.

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.

Optimizing the portfolio along the Efficient Frontier could enhance its risk-return ratio. This involves adjusting current assets to achieve the best possible balance of risk and return. However, optimization doesn't necessarily mean diversification across new assets. It focuses on maximizing efficiency with existing holdings. Consider rebalancing to improve the portfolio's risk-adjusted performance.

Dividends Info

  • Apple Inc 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 0.72%

The portfolio's dividend yield is relatively low at 0.72%, reflecting its growth orientation. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. Investors seeking regular income might consider adding higher-yielding assets. However, for growth-focused investors, reinvesting dividends can compound growth over time.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.02%

The portfolio benefits from impressively low costs, with total expense ratios (TER) of 0.02%. Lower costs directly improve net returns, making this a strength of the portfolio. Keeping expenses low is crucial for long-term performance, as high fees can erode gains. Continue to prioritize cost-effective investments to maximize returns.

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