A growth-focused US-centric portfolio with high risk and low diversification

Report created on Dec 13, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is primarily composed of ETFs and common stocks, with a significant weighting towards the SPDR S&P 500 ETF Trust and Amazon. The presence of two major ETFs and two individual stocks indicates a focus on broad market exposure and high-growth potential. However, the limited number of holdings may lead to concentrated risk. A well-structured portfolio should diversify across various asset types to balance growth and stability. Consider introducing additional asset classes or sectors to reduce risk and enhance diversification.

Growth Info

Historically, this portfolio has shown impressive growth with a compound annual growth rate (CAGR) of 30.12%. However, it also experienced a significant maximum drawdown of -58.78%, reflecting high volatility. While past performance can provide insights, it's not a guarantee of future results. High volatility suggests that the portfolio is suitable for investors who can tolerate significant fluctuations in value. To mitigate risk, consider strategies like dollar-cost averaging or diversifying further to reduce potential drawdowns.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, suggests a wide range of possible returns for this portfolio. The median outcome shows a potential end value increase of 6,273.1%, while the optimistic scenario projects an 11,078.52% gain. However, remember that simulations are based on past data, which may not account for future market changes. It's crucial to regularly review and adjust the portfolio to align with evolving market conditions and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, representing over 99.9% of the total allocation, with a negligible cash component. This high allocation to equities indicates a focus on growth but also suggests vulnerability to market volatility. Diversification across asset classes, such as bonds or real estate, could provide a buffer against stock market fluctuations. Consider incorporating other asset classes to balance the risk-return profile and provide more stability during market downturns.

Sectors Info

  • Technology
    43%
  • Consumer Discretionary
    28%
  • Telecommunications
    7%
  • Financials
    5%
  • Health Care
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

With a dominant allocation to the technology sector at over 43%, this portfolio is highly concentrated. While technology has been a strong performer, such concentration can expose the portfolio to sector-specific risks. The next largest allocations are in consumer cyclicals and communication services. A more balanced sectoral allocation can help mitigate risks associated with sector downturns. Consider expanding exposure to underrepresented sectors like healthcare or financial services to diversify risk.

Regions Info

  • North America
    99%

The portfolio is overwhelmingly concentrated in North American assets, which makes up over 99% of the geographic allocation. This lack of international diversification could expose the portfolio to regional economic downturns. Geographic diversification can help spread risk across different economic environments. Introducing more international assets, particularly from emerging markets, could enhance growth prospects and reduce dependence on the North American market.

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.

Examining the portfolio through the lens of the Efficient Frontier suggests potential for optimization. By adjusting the allocation among existing assets, it's possible to achieve a better risk-return ratio. This means finding a balance where the portfolio offers the maximum expected return for a given level of risk. Consider using optimization tools to explore different allocation scenarios and identify the most efficient mix of assets.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • SPDR S&P 500 ETF Trust 1.20%
  • Weighted yield (per year) 0.59%

The portfolio's dividend yield is relatively low at 0.59%, reflecting its focus on growth stocks rather than income-generating assets. While dividends can provide a steady income stream, high-growth stocks may reinvest earnings to fuel further growth. For investors seeking income, consider introducing higher-yielding assets to complement the growth potential. Balancing growth and income can provide a more stable return over time.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • SPDR S&P 500 ETF Trust 0.10%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio is quite low at 0.08%, which is advantageous for long-term growth as it minimizes the drag on returns. However, it's essential to regularly review these costs to ensure they remain competitive. Even small reductions in fees can significantly impact long-term performance. Consider comparing the expense ratios of similar funds and exploring lower-cost alternatives if available.

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