A growth-focused portfolio with substantial technology exposure and moderate geographic diversification

Report created on Jan 8, 2025

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 heavily weighted towards ETFs, with a significant 36.66% allocation to the Vanguard S&P 500 ETF, reflecting a strong emphasis on large-cap U.S. equities. The presence of sector-specific ETFs like cybersecurity and semiconductors highlights a focus on technology. While this composition aligns with a growth strategy, it lacks exposure to other asset classes like bonds or international equities. A more balanced composition could offer better risk management and diversification benefits, potentially smoothing returns over time.

Growth Info

Historically, the portfolio achieved a compound annual growth rate (CAGR) of 7.84%, indicating steady long-term growth. However, the maximum drawdown of -32.29% suggests vulnerability during market downturns. Compared to benchmarks like the S&P 500, this performance might be slightly lower, considering its tech-heavy focus. Understanding past performance helps set realistic expectations, but remember that past results don't guarantee future outcomes. It may be wise to assess risk tolerance and consider strategies to mitigate potential losses.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of possible returns. With only 116 out of 1,000 simulations showing positive returns, the portfolio's future performance appears uncertain. This highlights the importance of diversification and risk management. While simulations provide valuable insights, they are not foolproof. Consider diversifying further and reassessing asset allocation to improve the probability of achieving desired outcomes.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio is predominantly composed of stocks, accounting for over 94% of assets, with minimal allocation to bonds and cash. This stock-heavy allocation aligns with a growth strategy but may increase volatility. Compared to typical balanced portfolios, the lack of bonds could expose the portfolio to higher risk during market downturns. Diversifying into more asset classes, such as bonds or alternative investments, could enhance stability and provide a hedge against equity market fluctuations.

Sectors Info

  • Technology
    45%
  • Health Care
    11%
  • Telecommunications
    8%
  • Financials
    7%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Utilities
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Real Estate
    1%
  • Consumer Discretionary
    1%

The portfolio is notably concentrated in technology, with 45.34% of assets in this sector, which could lead to higher volatility during market corrections or interest rate hikes. Other sectors, like healthcare and communication services, offer some diversification but are relatively small in comparison. Aligning sector weights more closely with broader market benchmarks could reduce sector-specific risks and enhance overall stability. Consider gradually increasing exposure to underrepresented sectors for a more balanced approach.

Regions Info

  • North America
    84%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Japan
    1%
  • Africa/Middle East
    1%

With 84.07% of assets in North America, the portfolio is heavily skewed towards the U.S. market. While this provides exposure to a stable and mature market, it limits potential growth opportunities in emerging regions. Expanding geographic diversification could help capture growth in developing markets and reduce reliance on the U.S. economy. Consider adding exposure to international equities, particularly in regions with favorable economic prospects, to broaden the portfolio's geographic reach.

Redundant positions Info

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

The portfolio's assets show high correlation, particularly between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares. This high correlation means these assets tend to move together, reducing the diversification benefits. In times of market stress, correlated assets can amplify losses. To improve risk management, consider replacing highly correlated assets with those that have low or negative correlations, providing a better hedge against market volatility.

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's current allocation could be optimized using the Efficient Frontier to potentially achieve a better risk-return ratio. The Efficient Frontier is a concept that helps identify the most efficient portfolios, offering the highest expected return for a given level of risk. By adjusting the allocation among existing assets, you could enhance returns without increasing risk. Consider consulting with a financial advisor to explore rebalancing strategies that align with your risk tolerance and investment goals.

Dividends Info

  • ALPS Clean Energy 0.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • First Trust NASDAQ Cybersecurity ETF 0.20%
  • Fidelity® MSCI Communication Services Index ETF 0.60%
  • FIDELITY FOUR-IN-ONE INDEX FUND FIDELITY FOUR-IN-ONE INDEX FUND 0.10%
  • VanEck Semiconductor ETF 0.40%
  • Fidelity® Government Money Market Fund 4.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • SPDR® S&P Software & Services ETF 0.10%
  • Weighted yield (per year) 0.81%

The portfolio's dividend yield is relatively low at 0.81%, which is typical for a growth-focused strategy prioritizing capital appreciation over income. While dividends can provide a steady income stream and reduce overall portfolio volatility, they are less critical for investors seeking long-term growth. If income generation becomes a priority, consider reallocating a portion of the portfolio to dividend-focused funds or stocks that offer higher yields, balancing growth with income potential.

Ongoing product costs Info

  • ALPS Clean Energy 0.55%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • Fidelity® MSCI Communication Services Index ETF 0.08%
  • FIDELITY FOUR-IN-ONE INDEX FUND FIDELITY FOUR-IN-ONE INDEX FUND 0.11%
  • VanEck Semiconductor ETF 0.35%
  • VanEck Low Carbon Energy ETF 0.61%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • SPDR® S&P Software & Services ETF 0.35%
  • Weighted costs total (per year) 0.20%

The portfolio maintains a low Total Expense Ratio (TER) of 0.2%, which is commendable and supports better long-term returns. Low costs mean more of your investment returns are retained, compounding over time. Regularly reviewing and minimizing costs is crucial, as high fees can erode gains. Ensure that the cost savings align with your investment strategy and consider whether any high-fee assets can be replaced with more cost-effective alternatives without compromising portfolio objectives.

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