A balanced yet technology-heavy portfolio with limited geographic diversification and high historical growth

Report created on Dec 18, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards stocks, with 99.9% in equities and a mere 0.5% in cash. The largest holdings are ETFs like the SPDR S&P 500 and Fidelity Nasdaq Composite, which make up over 40% of the portfolio. Such a composition indicates a focus on broad market exposure while maintaining flexibility through individual stock selections. This structure is essential for balancing growth potential with some level of risk management. However, the lack of significant cash holdings suggests limited liquidity for immediate opportunities or needs. Consider increasing cash or cash-equivalent positions to enhance liquidity and reduce risk.

Growth Info

Historically, this portfolio has performed impressively, with a compound annual growth rate (CAGR) of 22.77%. The maximum drawdown of 24.46% indicates vulnerability during market downturns, a notable risk for investors. While past performance can provide insights, it's crucial to remember that it doesn't guarantee future results. This historical data can help set realistic expectations and guide future strategy. To mitigate drawdown risks, consider diversifying further across asset classes or sectors to cushion against market volatility.

Projection Info

Using Monte Carlo simulations, this portfolio's future performance was projected with a 1,000-simulation model. The results show a wide range of potential outcomes, with the median (50th percentile) projecting a 1,571.98% return. Monte Carlo simulations use historical data to model potential future outcomes, providing a probabilistic view of returns. However, they cannot account for unprecedented market events. While the projections are promising, it's wise to prepare for a range of outcomes, including less favorable scenarios. Regularly reassessing your risk tolerance and adjusting allocations can help manage expectations.

Asset classes Info

  • Stocks
    100%
  • Cash
    1%

The portfolio's significant allocation to stocks, almost 100%, suggests a focus on growth rather than income or stability. While equities offer substantial growth potential, they also introduce higher volatility. A more balanced allocation across different asset classes, such as bonds or real estate, could enhance diversification and reduce overall risk. Diversifying asset classes helps cushion against market swings, providing more stable returns over time. Consider exploring alternative asset classes to align with long-term goals and risk tolerance.

Sectors Info

  • Technology
    38%
  • Financials
    19%
  • Health Care
    11%
  • Consumer Staples
    10%
  • Energy
    7%
  • Consumer Discretionary
    5%
  • Telecommunications
    5%
  • Industrials
    3%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in the technology sector, comprising over 38% of the total allocation. This concentration can drive growth during tech booms but also increase vulnerability during sector-specific downturns. Sector diversification is crucial for spreading risk and capturing opportunities across various economic cycles. Balancing exposure across more sectors can mitigate sector-specific risks and provide a smoother performance trajectory. Consider adjusting allocations to achieve a more balanced sector distribution.

Regions Info

  • North America
    99%

Geographically, the portfolio is predominantly invested in North America, with over 99% exposure. This lack of international diversification limits potential growth opportunities in emerging markets and increases vulnerability to regional economic issues. Geographic diversification can help mitigate country-specific risks and tap into global growth. By expanding geographical exposure, investors can reduce regional risk and benefit from global economic trends. Consider reallocating a portion of assets to international markets for better diversification.

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 could be optimized using the Efficient Frontier to achieve a better risk-return ratio. The analysis suggests an optimal portfolio could deliver a 34.47% return with a risk level of 17.93%. Efficient Frontier optimization helps identify the best possible allocation of existing assets to achieve maximum returns for a given risk level. This process doesn't necessarily diversify but rather refines the balance between risk and reward. Consider rebalancing the portfolio to align with the optimal allocation for improved efficiency.

Dividends Info

  • Apple Inc 0.40%
  • Bank of America Corp 1.60%
  • International Business Machines 2.90%
  • Fidelity® Nasdaq Composite Index® ETF 0.40%
  • SPDR S&P 500 ETF Trust 0.80%
  • Stryker Corporation 0.90%
  • Walmart Inc 0.70%
  • Exxon Mobil Corp 3.50%
  • Weighted yield (per year) 0.88%

The portfolio offers a modest dividend yield of 0.88%, with notable contributions from Exxon Mobil and IBM. While dividends can provide a steady income stream, this portfolio's yield is relatively low, indicating a focus on capital appreciation rather than income. Dividends can be an important component of total returns, especially during volatile markets. Increasing exposure to high-dividend stocks or funds could enhance income without sacrificing growth potential. Consider balancing growth and income objectives to align with financial goals.

Ongoing product costs Info

  • Fidelity® Nasdaq Composite Index® ETF 0.21%
  • SPDR S&P 500 ETF Trust 0.10%
  • Weighted costs total (per year) 0.06%

The portfolio's costs are relatively low, with the highest expense ratio being 0.21% for the Fidelity Nasdaq Composite ETF. Low costs are beneficial as they preserve more of your returns over time. High fees can erode gains, especially in long-term investments. Keeping costs in check is crucial for maximizing net returns. Regularly reviewing and optimizing costs by selecting low-cost funds or negotiating fees can enhance long-term performance. Consider evaluating cost structures periodically to ensure efficiency.

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