High Growth Potential with Moderate Diversification in Tech-Heavy Portfolio

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 with a high risk tolerance, aiming for substantial capital appreciation. These investors typically have a long investment horizon, allowing them to ride out market volatility. They are often less reliant on current income and more focused on achieving significant growth over time. The portfolio's heavy concentration in technology and growth stocks aligns well with investors who are comfortable with market fluctuations and potential short-term losses for the chance of higher long-term gains.

Positions

  • VanEck Semiconductor ETF
    SMH - US92189F6768
    48.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    18.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    16.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    16.00%
  • Vanguard Short-Term Treasury Index Fund ETF Shares
    VGSH - US92206C1027
    2.00%

The portfolio is heavily weighted towards ETFs, with a notable emphasis on technology. The VanEck Semiconductor ETF accounts for nearly half of the portfolio, while other significant holdings include Vanguard S&P 500 ETF, Invesco NASDAQ 100 ETF, and Vanguard Information Technology Index Fund ETF Shares. A small portion is allocated to the Vanguard Short-Term Treasury Index Fund for some level of risk mitigation. This composition suggests a strong focus on growth, particularly within the tech sector, while maintaining some level of diversification across other sectors and asset classes.

Growth

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 21.31%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -38.35%. The fact that 90% of the returns were generated in just 18 days highlights the portfolio's reliance on high-performing, volatile assets. This performance profile suggests that while the portfolio has the potential for high returns, it also carries substantial risk, especially during market downturns.

Projection

A Monte Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the 5th percentile of outcomes shows a 65.23% return, while the median (50th percentile) projects a 582.08% return. The 67th percentile projects an even higher return of 866.61%. With 988 out of 1,000 simulations yielding positive returns, the overall annualized return across all simulations is estimated at 17.03%. This indicates strong growth potential but also underscores the high-risk nature of the portfolio.

Asset classes

  • Stocks
    98%
  • Bonds
    2%
  • Cash
    0%

The portfolio is predominantly composed of stocks, accounting for approximately 97.88% of the total allocation. Bonds make up about 2%, with a negligible amount in cash. This heavy skew towards equities aligns with a high-growth strategy but also increases the portfolio's exposure to market volatility. To balance risk, it may be beneficial to consider diversifying further into bonds or other lower-risk asset classes. This could help mitigate potential losses during market downturns.

Sectors

  • Technology
    77%
  • Telecommunications
    4%
  • Consumer Discretionary
    4%
  • Health Care
    3%
  • Financials
    2%
  • Industrials
    2%
  • Consumer Staples
    2%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    0%

Sector allocation is heavily concentrated in technology, which represents 77.29% of the portfolio. Other sectors like Communication Services, Consumer Cyclicals, and Healthcare make up smaller portions. This concentration in tech can lead to significant gains during tech booms but also exposes the portfolio to sector-specific risks. Diversifying into other sectors like Financial Services, Industrials, and Consumer Defensive could provide more stability and reduce the impact of sector-specific downturns.

Regions

  • North America
    87%
  • Asia Developed
    6%
  • Europe Developed
    4%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is overwhelmingly invested in North America, which accounts for 87.38% of the allocation. Smaller allocations are spread across Asia Developed, Europe Developed, and minimal exposure to Latin America, Asia Emerging, and Africa/Middle East. This geographic concentration in North America means the portfolio is heavily influenced by the U.S. market. Diversifying into other regions could help mitigate geopolitical risks and take advantage of growth opportunities in other parts of the world.

Dividends

  • Invesco NASDAQ 100 ETF 0.70%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 4.00%
  • Vanguard Information Technology Index Fund ETF Shares 0.70%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.73%

Dividend yield information is not provided, but given the high concentration in technology and growth-oriented ETFs, the portfolio is likely to have a lower dividend yield. Growth stocks typically reinvest earnings to fuel expansion rather than paying out dividends. For investors seeking income, incorporating dividend-paying stocks or ETFs could provide a more balanced approach, offering both growth and income.

Ongoing product costs

  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.21%

The total expense ratio (TER) of the portfolio is 0.21%, which is relatively low. The Vanguard S&P 500 ETF and Vanguard Short-Term Treasury Index Fund ETF Shares have particularly low expense ratios, contributing to the overall cost-efficiency. Keeping investment costs low is crucial for maximizing net returns over time. However, it's also important to ensure that low costs do not come at the expense of adequate diversification and risk management.

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