High-Risk Growth Portfolio with Low Diversification and Significant Tech Exposure

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 significant capital appreciation. These investors are likely focused on long-term growth and can withstand substantial market fluctuations. Their investment horizon is typically long-term, allowing them to ride out market volatility. This type of investor is less concerned with income generation and more focused on maximizing returns through high-growth assets.

Positions

  • iShares Core S&P Total U.S. Stock Market ETF
    ITOT - US4642871507
    40.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    30.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • Vanguard U.S. Quality Factor
    VFQY - US9219357061
    10.00%
  • Vanguard Extended Market Index Fund ETF Shares
    VXF - US9229086528
    10.00%

The portfolio consists predominantly of U.S. equity ETFs, with a heavy concentration in the iShares Core S&P Total U.S. Stock Market ETF and the Invesco NASDAQ 100 ETF. This indicates a strong preference for broad market exposure and high-growth sectors. However, the lack of diversification can pose risks in volatile market conditions. A more diversified approach could potentially reduce these risks and provide more stable returns over time.

Growth

Historically, this portfolio has shown a strong performance with a CAGR of 9.8%. However, it also experienced a significant maximum drawdown of -27.55%, indicating vulnerability during market downturns. This performance suggests a high-risk, high-reward strategy. To mitigate the impact of future market downturns, it might be wise to consider incorporating more stable, low-volatility assets into the portfolio.

Projection

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential outcomes. The 5th percentile projects a -76.1% return, while the 50th percentile projects an 88.41% return, and the 67th percentile projects a 206.64% return. This simulation highlights the portfolio's high volatility and potential for both significant gains and losses. To better manage risk, consider balancing the portfolio with assets that have lower volatility.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • No data
    0%
  • Other
    0%

The portfolio is almost entirely composed of stocks, with a negligible amount in cash and other asset classes. This high equity concentration aligns with a growth-oriented strategy but also increases exposure to market fluctuations. Diversifying into bonds or other asset classes could help cushion the portfolio against market volatility and provide more consistent returns.

Sectors

  • Technology
    32%
  • Consumer Discretionary
    12%
  • Financials
    11%
  • Industrials
    11%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is heavily skewed towards technology, which makes up 31.72% of the portfolio. Other significant sectors include Consumer Cyclicals, Financial Services, and Industrials. While tech stocks have high growth potential, their volatility can impact overall portfolio stability. A more balanced sector allocation can help mitigate sector-specific risks and provide more stable returns.

Regions

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

Geographically, the portfolio is overwhelmingly concentrated in North America, which accounts for 98.39% of the holdings. This lack of geographic diversification exposes the portfolio to regional market risks. Including more international assets could help spread risk and potentially enhance returns by tapping into growth opportunities in other regions.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • iShares Core S&P Total U.S. Stock Market ETF 1.30%
  • Invesco NASDAQ 100 ETF 0.70%
  • Vanguard Extended Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.02%

The portfolio's focus on growth stocks means that the dividend yield is likely low. While growth stocks can offer substantial capital appreciation, they typically pay lower dividends. For investors seeking income, incorporating dividend-paying stocks or income-generating assets could provide a more balanced approach.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • iShares Core S&P Total U.S. Stock Market ETF 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard U.S. Quality Factor 0.13%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is relatively low at 0.1%, which is advantageous for long-term growth as it minimizes the impact of fees on returns. Keeping investment costs low is crucial for maximizing net returns. However, always review the expense ratios regularly to ensure they remain competitive and aligned with investment goals.

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