Moderate Risk Growth Portfolio with High Tech Exposure and Strong Historical Performance

Report created on Dec 3, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is mainly composed of ETFs and a single common stock, with a substantial focus on the Vanguard S&P 500 ETF. This indicates a preference for broad market exposure, with a significant allocation to a single stock, NVIDIA, which suggests a bullish stance on the tech sector. The inclusion of small-cap and international ETFs adds a layer of diversification, albeit limited. This composition reflects a growth-oriented strategy, aiming to capitalize on market upswings while accepting a moderate level of risk.

Growth Info

Historically, the portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 35.13%. However, this comes with significant volatility, as indicated by a maximum drawdown of -50.32%. Such a performance suggests that while the portfolio can generate substantial returns in favorable market conditions, it is also prone to sharp declines during downturns. This underscores the importance of understanding the risk-return trade-off inherent in a growth-focused investment approach.

Projection Info

Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio shows promising growth prospects. With a hypothetical initial investment, the median outcome projects a substantial return of 3,776.76%. However, the range of outcomes is broad, reflecting the inherent uncertainty and risk. This analysis highlights the potential for significant gains, but also the possibility of less favorable results, emphasizing the need for a long-term investment horizon and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, making up nearly 100% of the asset allocation. This indicates a high-risk, high-reward strategy, as equities tend to offer greater growth potential but also higher volatility compared to other asset classes like bonds or cash. The minimal cash allocation suggests limited liquidity, which could be a concern during market downturns. To enhance stability, consider diversifying into other asset classes, which could help mitigate risk and provide more consistent returns over time.

Sectors Info

  • Technology
    48%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

With almost half of the portfolio invested in technology, there is a significant sector concentration. While this can lead to substantial gains if the tech sector performs well, it also exposes the portfolio to sector-specific risks. The remaining investments are spread across various sectors, providing some diversification. However, the heavy tech weighting could lead to volatility. Balancing the sector allocation by increasing exposure to other sectors could help reduce risk and enhance overall portfolio resilience.

Regions Info

  • North America
    94%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

The portfolio's geographic allocation is predominantly focused on North America, with over 93% of assets in the region. While this provides exposure to a stable and developed market, it limits the benefits of geographic diversification. Including more assets from other regions could enhance diversification, potentially reducing risk and capturing growth opportunities in emerging markets. A more balanced geographic allocation could help mitigate regional economic and political risks, providing a more robust investment strategy.

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 is positioned along the efficient frontier, indicating a balance between risk and return. However, there's room for optimization by adjusting the asset allocation to reduce volatility or enhance returns, depending on the investor's risk appetite. To achieve a riskier portfolio, increase exposure to high-growth sectors or regions. For a more conservative approach, consider adding bonds or diversifying across more sectors. This strategy can help tailor the portfolio to better align with personal financial goals and risk tolerance.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.00%

The portfolio's dividend yield is relatively low at 1.0%, indicating a focus on capital appreciation rather than income generation. While this aligns with a growth-oriented strategy, it may not suit investors seeking regular income. The dividend contributions from the small-cap and international ETFs provide some yield, but the overall focus remains on growth. If income generation becomes a priority, consider rebalancing the portfolio to include higher-yielding assets, which could provide a more balanced total return.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are relatively low, with a Total Expense Ratio (TER) of 0.05%, reflecting the inclusion of cost-efficient ETFs. This is advantageous as it minimizes the drag on returns due to fees, allowing more of the investment's growth to be realized by the investor. Keeping investment costs low is a prudent strategy, as it enhances net returns over time. Continuing to prioritize low-cost investment options will support long-term portfolio performance and align with sound investment principles.

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