High-Growth Portfolio with Low Diversity and Strong Tech Focus

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio is suitable for aggressive investors who have a high-risk tolerance and a long-term investment horizon. These investors are typically focused on capital appreciation and are willing to accept significant volatility and potential drawdowns. They often have a strong belief in the growth potential of the tech sector and U.S. large-cap stocks. This type of investor is less concerned with generating regular income and more focused on maximizing long-term returns.

Positions

  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    50.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%

The portfolio consists of three ETFs: Invesco NASDAQ 100 ETF (50%), Vanguard S&P 500 ETF (40%), and Avantis U.S. Small Cap Value ETF (10%). This composition shows a high concentration in large-cap U.S. stocks, particularly in the tech sector, given the significant allocation to the NASDAQ 100. While this can drive high returns, it also increases risk due to lack of diversification. To reduce risk, consider adding more asset classes and sectors to the portfolio, such as bonds or international stocks.

Growth

Historically, the portfolio has shown a strong performance with a CAGR of 14.58%. However, it experienced a significant max drawdown of -27.86%, indicating periods of high volatility. This performance suggests that while the portfolio can generate high returns, it is also susceptible to substantial losses during market downturns. To mitigate this risk, consider incorporating more defensive assets that can provide stability during volatile periods.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The median (50th percentile) end portfolio value is 892.72%, with a 5th percentile value of 152.79% and a 67th percentile value of 1,294.55%. This indicates a wide range of potential outcomes, reflecting the high-risk, high-reward nature of the portfolio. To improve the probability of achieving more consistent returns, consider diversifying the portfolio further.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is heavily weighted in stocks, with 99.91% allocated to equities and a mere 0.09% in cash. This asset allocation is highly aggressive and suitable for investors with a high-risk tolerance. However, the lack of exposure to other asset classes like bonds or real estate increases vulnerability to market volatility. To balance risk and return, consider adding other asset classes to the portfolio.

Sectors

  • Technology
    37%
  • Consumer Discretionary
    13%
  • Telecommunications
    12%
  • Health Care
    8%
  • Financials
    8%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is dominated by technology (37.43%), followed by consumer cyclicals (12.59%) and communication services (11.64%). This heavy concentration in tech can lead to high returns but also increases sector-specific risk. If the tech sector underperforms, the portfolio could suffer significantly. To reduce sector risk, consider diversifying into sectors like utilities or healthcare, which are less correlated with tech.

Regions

  • North America
    98%
  • Europe Developed
    1%
  • Asia Emerging
    0%
  • Latin America
    0%
  • Asia Developed
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is overwhelmingly focused on North America (98.10%), with minimal exposure to other regions. This geographic concentration exposes the portfolio to risks specific to the U.S. market, such as economic downturns or policy changes. To mitigate this risk, consider increasing exposure to international markets, which can provide diversification benefits and reduce overall portfolio risk.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.70%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.03%

Dividend yield data is not provided, but given the high concentration in growth-oriented sectors like technology, the portfolio likely has a lower dividend yield. Growth stocks typically reinvest earnings rather than pay out dividends, which can be advantageous for capital appreciation but less so for income generation. For those seeking regular income, consider adding dividend-paying stocks or ETFs to the portfolio.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.11%

The total expense ratio (TER) for the portfolio is 0.11%, which is relatively low. The Vanguard S&P 500 ETF has the lowest cost at 0.03%, followed by the Invesco NASDAQ 100 ETF at 0.15%, and the Avantis U.S. Small Cap Value ETF at 0.25%. Low costs are beneficial as they help maximize net returns. However, it's essential to balance cost-efficiency with diversification and risk management.

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