A growth oriented equity portfolio heavily exposed to US large caps and tech sector

Report created on Sep 17, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

Observation The portfolio is almost entirely equities with a 60% allocation to a broad S&P 500 ETF plus a 15% tilt to a large cap growth ETF and modest allocations to international and small cap value. Education Holding multiple large cap US funds can create overlap where two products own many of the same stocks. Overlap reduces the benefit you expect from diversification because it repeats exposure rather than broadening it. Recommendation Consider consolidating overlapping large cap exposure by trimming one of the two highly correlated large cap ETFs and reallocating proceeds to underrepresented areas such as international or mid small cap exposures to improve true diversification while keeping the growth profile intact.

Growth Info

Observation Historic performance shows a strong compounded annual growth rate (CAGR) of 17.07% with a maximum drawdown near minus 34.7% and just 20 days that produced 90% of returns. Education CAGR measures average annual growth like the average speed on a long trip and drawdown shows the deepest peak to trough decline. Concentrated return days mean a few market rallies drove most gains which increases realized outcome risk. Recommendation Maintain realistic expectations and a plan for large drawdowns such as periodic rebalancing or a cash buffer. Keep in mind past performance is not a reliable predictor and extreme concentration of positive days increases the chance of volatility.

Projection Info

Observation A 1 000 run Monte Carlo simulation which uses random sampling based on historical returns produced an annualized simulated return of about 18.4% with 987 of 1 000 runs showing positive returns and percentiles ranging from a roughly 80% end value at the 5th percentile to over 1 000% at the 67th. Education Monte Carlo is a method that simulates thousands of possible future paths based on past return patterns and volatility to show a range of outcomes rather than a single forecast. It helps illustrate upside potential and downside risk but relies on historical behavior which may not repeat. Recommendation Use simulation results to set realistic targets and drawdown tolerances and stress test the plan under scenarios like prolonged volatility or lower long term returns.

Asset classes Info

  • Stocks
    100%

Observation Asset class exposure is 100% equities with no fixed income cash or alternative allocations which matches the growth risk classification. Education Having only stocks boosts long term return potential but also raises volatility and peak declines. A balanced portfolio often includes bonds or cash which act like shock absorbers during downturns by providing steady income and lower correlation to equities. Recommendation If the investor can tolerate large swings keep the equity posture but consider a small allocation to bonds or cash for liquidity and volatility smoothing or use systematic rebalancing to lock in gains and control risk without changing the growth objective.

Sectors Info

  • Technology
    32%
  • Financials
    15%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Industrials
    9%
  • Health Care
    8%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Observation The sector mix shows a large concentration in technology at about 32% with meaningful weights in financials consumer cyclicals and communication services and smaller positions in healthcare and defensive sectors. Education A tech heavy profile can amplify returns in favorable cycles but also increases sensitivity to rising interest rates regulation or sentiment shifts. Sector concentration means the portfolio may move differently than broad benchmarks during sector specific shocks. Recommendation Consider setting soft sector caps or modestly trimming tech gains into underweighted sectors such as healthcare or industrials or add complementary exposures that behave differently in interest rate or growth slowdowns to reduce sector driven volatility.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Observation Geographic exposure is heavily tilted to North America at 86% with limited developed Europe and small emerging market representation. Education Heavy home market bias concentrates economic regulatory and currency risk and reduces exposure to growth opportunities outside the US. Geographic diversification smooths returns across differing economic cycles and can offer access to cheaper valuations or higher yields abroad. Recommendation Consider increasing allocations to developed international and selectively to emerging markets to broaden opportunity set and reduce single country concentration while maintaining the overall growth orientation.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    29%
  • Mid-cap
    15%
  • Small-cap
    6%
  • Micro-cap
    5%

Observation Market cap breakdown shows strong mega cap exposure at 44% plus big caps at 29% and relatively modest mid small and micro cap weights. Education Larger companies often provide stability and lower short term volatility while smaller caps can add return potential and diversification because they respond differently to economic changes. The existing small cap value position provides a value tilt but the overall market cap mix still skews to large caps which can limit upside in certain market regimes. Recommendation If seeking higher long term expected return consider modestly increasing mid and small cap exposure while monitoring liquidity and cost trade offs to keep the portfolio aligned with risk tolerance.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

Observation Analysis flags a high correlation between the Schwab U.S. Large Cap Growth ETF and the Vanguard S&P 500 ETF meaning those holdings move very similarly. Education Correlation measures how closely assets move together a correlation near one means they largely track each other so adding both gives little extra diversification. During market stress highly correlated holdings tend to fall together which limits risk reduction. Recommendation Reduce redundancy by removing or trimming one of the overlapping funds or replace it with an asset class or strategy that historically shows lower correlation to US large caps to improve true diversification.

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.

Observation Optimization advice highlights that removing overlapping highly correlated assets should come before running an Efficient Frontier analysis which would then find the best risk return trade offs among remaining assets. Education The Efficient Frontier is the set of portfolios that offer the highest expected return for each level of risk or the lowest risk for a given return similar to choosing the fastest route for a given fuel budget. It only optimizes using the current asset choices and their historical statistics so the output depends heavily on which assets are included. Recommendation Consolidate redundant large cap positions then rerun optimization or include additional low correlation asset classes to shift the frontier outward improving the portfolio risk return profile within the growth mandate.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard S&P 500 ETF 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.27%

Observation The portfolio yield is modest around 1.27% with the international ETF contributing the highest yield and the growth ETF near 0.3% which is typical for growth oriented holdings. Education Dividend yield is income paid by stocks and can smooth total returns and provide cash flow during weak markets but lower yielding growth assets prioritize capital appreciation instead. For investors not reliant on income the yield is a secondary factor compared with long term growth potential. Recommendation If income or yield smoothing is desired increase allocation to higher dividend or value oriented holdings or select a small bond sleeve otherwise keep the current setup aligned with capital growth objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

Observation The total expense ratio aggregates to roughly 0.06% which is very low with the most expensive holding at 0.25% and others near 0.03 0.04 and 0.05. Education TER or total expense ratio represents the annual cost of owning a fund and lower fees compound into better net returns over time much like paying less in tolls over a long road trip increases your final balance. Recommendation Continue prioritizing low cost instruments and be cautious when adding higher cost active funds unless there is a compelling case for expected alpha that exceeds fees and tax costs keep periodic fee reviews as part of ongoing maintenance.

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