A growth-focused portfolio with high risk and low diversification in the US market

Report created on Dec 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is composed primarily of two ETFs: the Vanguard Total Stock Market Index Fund ETF Shares and the Fidelity® Nasdaq Composite Index® ETF, with allocations of 60% and 40%, respectively. This composition leans heavily towards equities, indicating a strong growth focus. Compared to common benchmarks, this portfolio lacks diversification across asset classes, as it is primarily invested in stocks. A more diversified portfolio might include bonds or other asset classes to balance risk and return.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.01%. However, it has experienced significant volatility, as evidenced by a maximum drawdown of -32.81%. This means that while the portfolio has the potential for high returns, it also carries substantial risk. Comparing this to benchmarks, the returns are impressive, but the volatility could be concerning for risk-averse investors. Diversifying could help mitigate these sharp declines.

Projection Info

The Monte Carlo analysis, which uses historical data to simulate future outcomes, suggests a wide range of potential returns. The median projection shows a 593.19% return, while the 5th percentile indicates a more modest 100.67% gain. This highlights the uncertainty and variability of future performance. It's important to remember that these simulations are based on past data and don't guarantee future results. Regular portfolio reviews can help adjust strategies as needed.

Asset classes Info

  • Stocks
    100%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with only a small cash position. This allocation provides high growth potential but also increases exposure to market volatility. Compared to typical benchmarks, which often include bonds or other fixed-income assets, this portfolio is less diversified. Adding different asset classes could reduce risk and provide more stable returns over time, particularly during market downturns.

Sectors Info

  • Technology
    39%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Sector allocation is heavily skewed towards technology, which comprises nearly 39% of the portfolio. While this can drive growth during tech booms, it also exposes the portfolio to sector-specific risks, such as regulatory changes or tech market downturns. Compared to benchmarks, this portfolio is less balanced across sectors. Diversifying into underrepresented sectors could reduce risk and potentially improve long-term returns.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

With 98.47% of assets allocated to North America, the portfolio is highly concentrated geographically. This lack of international exposure limits diversification benefits and subjects the portfolio to regional economic risks. Common benchmarks often have a more balanced geographic distribution. Increasing exposure to international markets could enhance diversification and provide opportunities for growth in different economic environments.

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 not currently optimized on the Efficient Frontier, which represents the best possible risk-return ratio for a given set of assets. Adjusting the asset allocation could potentially enhance returns without increasing risk. However, this optimization would only consider the current assets, not introducing new ones. Regularly reassessing the portfolio's positioning on the Efficient Frontier could improve performance.

Dividends Info

  • Fidelity® Nasdaq Composite Index® ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Weighted yield (per year) 0.70%

The portfolio's dividend yield is relatively low at 0.7%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation. For investors seeking regular income, incorporating higher-yielding assets might be beneficial. However, for growth-oriented investors, the current yield is consistent with the portfolio's objectives.

Ongoing product costs Info

  • Fidelity® Nasdaq Composite Index® ETF 0.21%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is low at 0.1%, which is advantageous for long-term performance. Lower costs mean more of the portfolio's returns are retained, compounding over time. This aligns well with best practices and supports the portfolio's growth objectives. Maintaining low costs is crucial, and it's worth periodically reviewing to ensure cost efficiency remains optimal.

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