A technology-heavy growth portfolio with significant US exposure and moderate risk profile

Report created on Dec 6, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards ETFs, with a significant allocation to individual stocks. The VanEck Semiconductor ETF and Vanguard S&P 500 ETF hold the largest stakes, representing a combined 52.65% of the portfolio. The presence of individual stocks like Taiwan Semiconductor Manufacturing and Costco Wholesale Corp adds a unique layer of risk and potential reward. Understanding the mix of ETFs and individual stocks is crucial, as ETFs typically offer diversification benefits, while individual stocks can provide targeted growth opportunities. To optimize growth potential, consider maintaining a balance between ETFs and individual stocks, ensuring alignment with your risk tolerance and investment objectives.

Growth Info

The historical performance of this portfolio has been impressive, with a compound annual growth rate (CAGR) of 27.7%. However, it has experienced significant volatility, as evidenced by a maximum drawdown of -35.49%. This highlights the potential for large fluctuations in value, which is common in growth-oriented portfolios. While past performance can provide insights, it does not guarantee future results. Investors should be prepared for periods of both strong returns and potential losses. To manage risk, consider strategies such as rebalancing and setting stop-loss orders to protect against significant downturns.

Projection Info

Using Monte Carlo simulations, which generate a range of potential outcomes based on historical data, this portfolio shows promising forward projections. The median outcome suggests a potential increase of 2,428.63%, with a high probability of positive returns. However, it is important to note that these projections are not predictions, but rather scenarios that help assess risk and potential. While the simulations suggest strong growth, they also highlight the uncertainty inherent in investing. To mitigate risks, consider diversifying further or adjusting allocations to align with changing market conditions and personal risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash. This focus on equities aligns with a growth-oriented strategy, offering potential for higher returns over the long term. However, such a high concentration in stocks can lead to increased volatility, particularly during market downturns. Diversification across different asset classes, such as bonds or real estate, could help stabilize returns and reduce risk. To enhance diversification, consider incorporating other asset classes that align with your investment goals and risk tolerance.

Sectors Info

  • Technology
    55%
  • Consumer Staples
    12%
  • Industrials
    8%
  • Financials
    8%
  • Consumer Discretionary
    6%
  • Health Care
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Telecommunications
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, which accounts for over half of the total allocation. While this sector has historically driven strong returns, it also brings heightened volatility and sector-specific risks. The remaining allocation is spread across various sectors, providing some diversification. However, reliance on a single sector can expose the portfolio to significant risk if that sector underperforms. To mitigate this risk, consider rebalancing to include more diverse sector exposure, ensuring that no single sector dominates the portfolio.

Regions Info

  • North America
    80%
  • Asia Emerging
    13%
  • Asia Developed
    4%
  • Europe Developed
    2%

The portfolio's geographic exposure is predominantly in North America, with limited diversification across other regions. While North American markets have historically performed well, over-reliance on a single region can increase vulnerability to local economic and political events. The exposure to Asia, both emerging and developed, provides some diversification but remains relatively small. To enhance global diversification, consider increasing allocations to other regions, such as Europe or Latin America, to reduce regional risk and capture potential growth opportunities.

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 potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the current asset allocation to maximize returns for a given level of risk. By analyzing the risk-return profile of each asset, investors can identify opportunities to reallocate resources for enhanced efficiency. However, it's important to note that optimizing for efficiency may not align with other goals, such as diversification or sector exposure. Regularly reviewing and adjusting the portfolio can help maintain an optimal balance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Costco Wholesale Corp 2.00%
  • VanEck Semiconductor ETF 0.40%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard S&P 500 ETF 1.20%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 1.47%

The portfolio offers a moderate dividend yield of 1.47%, with contributions from various holdings, including the Invesco S&P MidCap Quality ETF, which provides a notable 4.7% yield. While dividends can enhance total returns and provide a steady income stream, the focus remains on growth rather than income generation. Investors seeking higher income might consider increasing allocations to high-dividend stocks or dividend-focused ETFs. Balancing the pursuit of growth with dividend income can help achieve a more stable return profile over time.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is relatively low at 0.18%, which is beneficial for long-term returns. Lower costs mean more of the portfolio's returns are retained by the investor. However, the VanEck Semiconductor ETF has a higher expense ratio of 0.35%, which could impact net returns over time. To further reduce costs, consider evaluating the expense ratios of current holdings and exploring lower-cost alternatives that offer similar exposure. Reducing fees can significantly enhance the portfolio's performance over the long term.

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