High Risk Quantum-Heavy Portfolio with Moderate Diversification and Substantial Tech Focus

Report created on Dec 3, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs and a single common stock, with a significant 31% allocation to the Defiance Quantum ETF. This is complemented by a 22% allocation to Rigetti Computing Inc, indicating a strong focus on quantum computing. Other holdings include various Vanguard ETFs and the iShares Gold Trust, providing some diversification across asset classes. The portfolio is moderately diversified, with a risk score of 6 out of 7, suggesting a high-risk tolerance. The mix of ETFs and a single stock indicates a balanced approach to capturing growth while managing risk.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 15.64%. However, this growth comes with considerable volatility, as evidenced by a maximum drawdown of -38.97%. This indicates that while the portfolio has the potential for high returns, it is also susceptible to significant losses. The concentration of returns in just seven days suggests that timing and market conditions heavily influence performance. This pattern is typical for aggressive portfolios, where high risk can lead to high reward but also greater vulnerability to market swings.

Projection Info

Using a Monte Carlo simulation, which models potential future performance based on historical data, the portfolio's projected returns are varied. With 1,000 simulations, the 5th percentile shows a potential loss of -95.22%, while the 50th percentile projects a gain of 24.29%. The 67th percentile suggests a substantial increase of 161.83%. Overall, the annualized return across all simulations is 14.88%. This indicates a wide range of possible outcomes, consistent with the portfolio's aggressive nature. While the potential for high returns exists, so does the risk of significant losses.

Asset classes Info

  • Stocks
    78%
  • Other
    14%
  • Bonds
    8%

The portfolio is heavily weighted towards stocks, comprising approximately 78% of the total allocation. Bonds make up about 8%, while other assets, including gold, account for 14%. This allocation reflects a high-risk, high-reward strategy typical of aggressive investors. The limited exposure to bonds suggests a focus on growth rather than income or stability. The inclusion of gold provides some diversification and a hedge against market volatility. To balance risk and return, consider increasing the allocation to bonds or other fixed-income assets, which can provide more stability.

Sectors Info

  • Technology
    51%
  • Industrials
    7%
  • Financials
    4%
  • Telecommunications
    4%
  • Health Care
    3%
  • Consumer Discretionary
    3%
  • Consumer Staples
    2%
  • Energy
    2%
  • Utilities
    1%
  • Basic Materials
    1%

The portfolio is significantly concentrated in the technology sector, accounting for over 50% of the total allocation. Other sectors, such as industrials, financial services, and communication services, have much smaller representations. This heavy tech focus aligns with the portfolio's aggressive risk profile but also increases vulnerability to sector-specific downturns. Diversifying into other sectors could mitigate this risk and provide more balanced exposure. Consider allocating more to underrepresented sectors to enhance diversification and reduce reliance on the technology sector's performance.

Regions Info

  • North America
    67%
  • Europe Developed
    4%
  • Japan
    3%
  • Asia Developed
    2%
  • Asia Emerging
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with over 66% of assets allocated there. Other regions, such as Europe Developed, Japan, and various parts of Asia, have minimal representation. This concentration in North America reflects a home bias and exposes the portfolio to regional economic fluctuations. Expanding geographic diversification could reduce risk and capture growth opportunities in other parts of the world. Consider increasing exposure to international markets to achieve a more balanced geographic allocation and potentially enhance returns.

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 optimization chart suggests that there is room for improvement in terms of risk and return balance. Moving along the efficient frontier can help achieve a more optimal allocation. To pursue a riskier portfolio, increase exposure to high-growth assets, while a more conservative approach would involve boosting bond allocations. However, before optimizing, focus on enhancing diversification and reducing sector concentration. This foundational step can improve the portfolio's overall resilience and performance. Once diversification is addressed, further optimization can fine-tune risk-return dynamics.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Defiance Quantum 0.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Weighted yield (per year) 1.02%

The portfolio has a total dividend yield of 1.02%, with contributions from various ETFs, particularly the Vanguard High Dividend Yield Index Fund ETF Shares, which offers a 2.7% yield. This yield is modest, reflecting the portfolio's growth-oriented approach rather than an income-focused strategy. Increasing the allocation to high-dividend assets could enhance income generation for investors seeking regular cash flow. However, it's essential to balance this with growth objectives to maintain the portfolio's overall strategy. Consider evaluating dividend-paying stocks or ETFs to boost income potential.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Gold Trust 0.25%
  • Defiance Quantum 0.40%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is relatively low and indicates cost-effective management. Vanguard ETFs contribute to this efficiency with minimal fees, enhancing net returns. Keeping investment costs low is crucial for optimizing long-term performance. While the current cost structure is favorable, continue to monitor fees and consider lower-cost alternatives if available. Maintaining a focus on cost efficiency can significantly impact the portfolio's overall returns, especially in volatile markets. Regularly reviewing expense ratios ensures that investment costs remain in check.

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