A growth-focused portfolio with strong U.S. exposure and broad diversification

Report created on Feb 15, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of equity funds, with a significant allocation to the Fidelity Blue Chip Growth Fund and the iShares Core S&P 500 ETF, which together make up over 60% of the portfolio. This heavy weighting in large-cap U.S. equities aligns with a growth-focused investment strategy. The inclusion of bond and emerging market funds provides some diversification, though the equity concentration suggests a higher risk profile. Investors should consider whether the current allocation meets their risk tolerance and goals, or if adjustments are needed to balance growth with stability.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 16.14%, which indicates strong growth over time. However, the max drawdown of -31.64% highlights the potential for significant losses during market downturns. This performance is impressive compared to typical benchmarks, but investors should be aware that past returns do not guarantee future success. To manage risk, consider diversifying further or using strategies like stop-loss orders to protect against sharp declines.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of possible returns for this portfolio. With a median return of 577% and 995 out of 1,000 simulations yielding positive results, the projections are optimistic. However, the 5th percentile at 89.8% indicates some downside risk. Investors should view these projections as one of many tools for decision-making, not as certainties, and regularly review their portfolio in light of changing market conditions.

Asset classes Info

  • Stocks
    91%
  • Bonds
    8%
  • Other
    1%

The portfolio is heavily weighted towards stocks, which make up 91% of its allocation, with a modest 8% in bonds. This reflects a strong preference for growth over income and stability. While this allocation can lead to higher returns, it also increases volatility. For those concerned about risk, gradually increasing the bond allocation could help stabilize returns without drastically altering the growth focus. This shift can be achieved by reallocating some equity positions into more conservative bond funds.

Sectors Info

  • Technology
    32%
  • Financials
    11%
  • Telecommunications
    10%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio's sector allocation is tech-heavy, with 32% in technology, followed by financial services and communication services. This concentration in tech can lead to higher volatility, especially during periods of interest rate hikes or regulatory changes. However, it also positions the portfolio to benefit from technological advancements and innovation. To mitigate sector-specific risks, consider diversifying into underrepresented sectors such as utilities or real estate, which can provide stability during economic fluctuations.

Regions Info

  • North America
    75%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 75% of assets allocated there. This strong U.S. bias can benefit from the stability and growth of the American market but may miss opportunities in other regions. To enhance geographic diversification, consider increasing exposure to emerging markets or other developed regions. This can help reduce reliance on the U.S. economy and capture growth potential in faster-growing areas, balancing the portfolio against global economic shifts.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    25%
  • Mid-cap
    14%
  • Small-cap
    2%

The portfolio leans heavily towards mega and large-cap stocks, which together account for 74% of the allocation. This focus on larger companies offers stability and lower volatility compared to small or micro-cap stocks. However, it may limit exposure to potentially higher-growth opportunities found in smaller companies. To enhance diversification and growth potential, consider increasing the allocation to medium and small-cap stocks, which can add dynamism and complement the existing large-cap focus.

Redundant positions Info

  • iShares Core S&P 500 ETF
    iShares MSCI USA Quality Factor ETF
    FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains several highly correlated assets, such as the iShares Core S&P 500 ETF and the Fidelity Blue Chip Growth Fund. This high correlation can limit diversification benefits, as these assets tend to move in tandem. During market downturns, this could lead to amplified losses. To improve diversification, consider replacing some correlated assets with those that have lower correlations, which can help reduce overall portfolio risk and enhance stability during volatile periods.

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 can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. By adjusting allocations, you can potentially achieve higher returns for the same level of risk or maintain returns while reducing risk. This process involves reallocating funds among existing assets rather than introducing new ones. Keep in mind that optimization is based on historical data and assumptions, so regular reviews are necessary to adapt to changing market conditions.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 0.20%
  • iShares Core S&P 500 ETF 1.20%
  • iShares MSCI USA Quality Factor ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® Momentum ETF 0.40%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.70%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.12%

The portfolio's dividend yield is relatively low at 1.12%, reflecting its growth-oriented strategy. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. For investors seeking more income, increasing the allocation to higher-yielding assets, such as certain bond funds or dividend-focused equity funds, could be beneficial. However, this should be balanced against the potential for reduced growth, considering the investor's overall objectives and risk tolerance.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 0.47%
  • iShares Core S&P 500 ETF 0.03%
  • iShares MSCI USA Quality Factor ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, which is competitive and supports better long-term performance by minimizing costs. Lower fees mean more of your investment returns are retained, compounding over time. However, the Fidelity Blue Chip Growth Fund has a higher expense ratio of 0.47%. Consider whether this higher cost is justified by performance and explore lower-cost alternatives if necessary. Regularly reviewing and optimizing costs can enhance net returns without altering the investment strategy.

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