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

Report created on Dec 31, 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 heavily weighted towards U.S. equities, with a significant focus on large-cap growth stocks. This composition aligns well with a growth-oriented strategy, as large-cap stocks often provide stability and growth potential. However, the concentration in U.S. equities may limit diversification benefits. Consider diversifying further by incorporating more international or alternative asset classes to mitigate regional risks.

Growth Info

The portfolio has demonstrated impressive historical performance, with a Compound Annual Growth Rate (CAGR) of 14.39%. This suggests strong growth potential, outperforming many traditional benchmarks. However, it's important to remember that past performance does not guarantee future results. The maximum drawdown of -34.07% highlights potential volatility, emphasizing the need for a risk management strategy to protect against significant market downturns.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, with a median return of 415.91%. This method uses historical data to project future performance, but it's important to note that it cannot predict future market conditions with certainty. The high number of simulations with positive returns is encouraging, but diversifying to reduce risk further could enhance stability.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, accounting for nearly 100% of the allocation. While this is typical for growth-focused portfolios, it may expose the investor to higher volatility. Introducing bonds or other asset classes could provide a buffer during market downturns, leading to a more balanced risk-return profile. This could better align with a moderately diversified strategy.

Sectors Info

  • Technology
    35%
  • Financials
    12%
  • Consumer Discretionary
    12%
  • Health Care
    11%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is heavily skewed towards technology, making up over 35% of the portfolio. While this may drive growth, it also increases sensitivity to tech sector volatility, especially during regulatory changes or interest rate hikes. Balancing sector exposure by increasing allocations to underrepresented areas like utilities or real estate could provide more stability and reduce sector-specific risks.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

With nearly 95% of the portfolio in North American assets, geographic diversification is limited. While this provides familiarity and stability, it also exposes the portfolio to regional economic risks. Expanding geographic exposure, particularly in emerging markets or developed regions outside of North America, could enhance diversification and capture growth opportunities globally.

Redundant positions Info

  • Schwab U.S. Broad Market ETF
    SPDR® Portfolio S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. market ETFs. This high correlation means that during market downturns, these assets may move in tandem, reducing the diversification benefits. Consider replacing some of these with less correlated assets to improve risk management and enhance the overall diversification of the portfolio.

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 could benefit from risk-return optimization using the Efficient Frontier concept. This involves adjusting asset weights to achieve the best possible risk-return ratio with the current assets. While it's a powerful tool, it's important to remember that it doesn't account for diversification or personal investment goals, so use it as a guide rather than a strict rule.

Dividends Info

  • Schwab U.S. Broad Market ETF 0.90%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • SPDR® Portfolio S&P 500 Value ETF 1.60%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.08%

The portfolio's dividend yield is relatively low at 1.08%, reflecting its growth-oriented strategy. Dividends can provide a steady income stream and reduce reliance on capital gains for returns. If income is a goal, consider incorporating higher-yielding assets or dividend-focused funds to improve the portfolio's income profile without sacrificing growth potential.

Ongoing product costs Info

  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • SPDR® Portfolio S&P 500 Value ETF 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.03%

The portfolio boasts impressively low costs, with a total expense ratio of just 0.03%. This is advantageous for long-term performance, as lower fees mean more of the returns are retained. Maintaining this cost structure is beneficial, but always stay vigilant for opportunities to replace higher-cost investments with equally effective, lower-cost alternatives.

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