A speculative portfolio with high risk and growth potential but limited geographic diversification

Report created on Dec 16, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is primarily composed of ETFs and common stocks, with a significant emphasis on equities. The SPDR S&P 500 ETF Trust makes up the largest portion, at 31.25%, followed by substantial positions in Grayscale Ethereum and Bitcoin Trusts. The remaining assets include sector-specific ETFs and a small allocation to bonds and gold. This composition suggests a focus on growth-oriented assets with a tilt towards technology and cryptocurrency. For investors, understanding this mix is crucial as it indicates a high risk-reward profile, necessitating a strong stomach for volatility.

Growth Info

Historically, this portfolio has shown a remarkable compound annual growth rate (CAGR) of 58.71%, albeit with a maximum drawdown of -76.08%. This high growth and volatility reflect the speculative nature of the assets, particularly cryptocurrencies. Investors should note that while past performance can provide insights, it does not guarantee future results. It's essential to consider whether one can withstand significant fluctuations, as only 9 days accounted for 90% of past returns, indicating sporadic spikes in performance.

Projection Info

Utilizing Monte Carlo simulations, this portfolio's future performance was projected, showing a wide range of potential outcomes. Simulations suggest an annualized return of 46.72%, with a 5th percentile indicating almost complete loss and a 67th percentile predicting substantial gains. While these projections offer a glimpse into possible futures, they rely on historical data and assumptions that may not hold true. Therefore, investors should use these insights cautiously, recognizing the inherent uncertainties and potential for both significant gains and losses.

Asset classes Info

  • Stocks
    79%
  • Other
    16%
  • Bonds
    3%
  • Cash
    2%

The portfolio is heavily weighted towards stocks, constituting approximately 78.73% of the total allocation. Other asset classes like bonds, gold, and cash make up smaller portions. This heavy equity focus indicates a high-risk, high-reward strategy. Diversifying into other asset classes could reduce risk, but it may also dilute potential returns. Investors should assess their risk tolerance and consider whether the current allocation aligns with their financial goals, potentially exploring opportunities to balance growth with stability.

Sectors Info

  • No data
    25%
  • Consumer Staples
    15%
  • Technology
    14%
  • Financials
    5%
  • Consumer Discretionary
    5%
  • Health Care
    4%
  • Telecommunications
    4%
  • Industrials
    4%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector analysis reveals a notable concentration in the technology and consumer defensive sectors, alongside a significant portion in unknown sectors, likely due to cryptocurrency holdings. This concentration can lead to higher volatility, especially in technology-driven markets. While sector-specific investments can offer targeted growth opportunities, they also increase exposure to sector-specific risks. Investors might consider diversifying across more sectors to reduce potential downside risk, ensuring a more balanced approach to sector allocation.

Regions Info

  • North America
    50%
  • No data
    25%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with a significant 25% allocation in unknown regions, likely tied to cryptocurrency holdings. This limited geographic diversification can expose the portfolio to region-specific risks and opportunities. Expanding exposure to other regions could enhance diversification and potentially reduce risk. Investors should evaluate the benefits of a more globally diversified portfolio, considering the potential for growth in emerging markets and other underrepresented regions.

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's current allocation can be optimized using the Efficient Frontier to achieve a better risk-return ratio. By adjusting the weightings among existing assets, investors can potentially enhance returns for a given level of risk. This optimization focuses on maximizing efficiency without necessarily increasing diversification. Investors should periodically review their portfolio to ensure it remains aligned with their risk tolerance and financial goals, taking advantage of optimization techniques to improve performance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • SPDR S&P 500 ETF Trust 0.80%
  • ProShares UltraPro QQQ 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Consumer Staples Select Sector SPDR® Fund 2.60%
  • Weighted yield (per year) 0.94%

Dividend yields in this portfolio are relatively modest, with a total yield of 0.94%. The focus on growth-oriented assets like technology stocks and cryptocurrencies often results in lower dividend income. For investors seeking regular income, this may not be ideal. Adjusting the portfolio to include higher-yielding assets could supplement income needs, though it may impact growth potential. Evaluating the role of dividends in one's investment strategy is crucial, balancing income with capital appreciation goals.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Grayscale Bitcoin Trust (BTC) 1.50%
  • SPDR® Gold Shares 0.40%
  • SPDR S&P 500 ETF Trust 0.10%
  • ProShares UltraPro QQQ 0.88%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.30%

Portfolio costs are relatively low, with a total expense ratio of 0.3%. However, the Grayscale Bitcoin Trust incurs a notably high fee of 1.5%. Reducing costs can improve net returns over time, especially in a high-growth portfolio. Investors should consider the impact of fees on long-term performance and explore lower-cost alternatives where possible. Balancing cost efficiency with investment objectives is essential, ensuring that fees do not erode potential gains unnecessarily.

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