Growth-Oriented Broadly Diversified Portfolio with High Risk and Strong Historical Performance

Report created on Dec 2, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of two Vanguard ETFs, making up over 76% of the total allocation. It also includes individual stocks from major companies like Amazon, Apple, BlackRock, NVIDIA, and Alphabet. This composition indicates a strong focus on growth, with a significant portion of the investment in well-known and successful companies. The presence of ETFs provides broad market exposure, which is beneficial for diversification. However, the large allocation to two ETFs may lead to overlapping holdings, which could reduce the diversification benefits.

Growth Info

Historically, the portfolio has performed impressively with a compound annual growth rate (CAGR) of 17.2%. This suggests that the portfolio has been able to capitalize on market upswings effectively. However, it's important to note the maximum drawdown of -46.09%, which highlights the potential risk during market downturns. This performance indicates a high-risk, high-reward strategy. It’s crucial to understand that past performance is not indicative of future results, and maintaining a balanced approach is key to managing risk.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential future outcomes. With a hypothetical initial investment, the 50th percentile projects a return of 2,551.4%, while the 5th percentile is at 327.99%. This suggests a high level of uncertainty but also significant potential for growth. The annualized return of all simulations is 30.58%, indicating strong future performance possibilities. Monte Carlo simulations provide a probabilistic approach to understanding potential portfolio outcomes, emphasizing the importance of diversification and risk management.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, accounting for over 99% of the total allocation. This indicates a high-risk profile, as stocks are generally more volatile than other asset classes like bonds or cash. While this can lead to higher returns, it also exposes the portfolio to greater fluctuations. Diversifying across different asset classes can help mitigate risk and provide more stable returns. Consider incorporating more asset classes to balance the risk and potentially enhance the portfolio's resilience during market downturns.

Sectors Info

  • Technology
    29%
  • Consumer Discretionary
    16%
  • Financials
    15%
  • Telecommunications
    10%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is concentrated in technology, consumer cyclicals, and financial services, which together make up over 60% of the portfolio. This concentration can lead to increased volatility, as these sectors are often more sensitive to economic changes. Diversifying across a broader range of sectors can help reduce risk and provide more stable returns. It's important to ensure that the portfolio is not overly reliant on a few sectors and to consider adjusting the allocation to achieve a more balanced sector exposure.

Regions Info

  • North America
    87%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America, with over 87% of the allocation. This concentration exposes the portfolio to regional risks and limits the benefits of global diversification. While North American markets have historically performed well, diversifying into other regions can help mitigate risks associated with economic or political events in a single region. Consider increasing exposure to international markets to enhance diversification and potentially capture growth opportunities in other parts of the world.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly the two Vanguard ETFs, which may not provide the desired diversification benefits. Correlated assets tend to move in the same direction, which can increase the portfolio's overall risk. Reducing the allocation to overlapping assets and incorporating investments with lower correlations can help achieve better diversification. This approach can lead to a more resilient portfolio that is better equipped to weather market fluctuations and achieve more consistent returns over time.

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.

Before optimizing, it's crucial to address the issue of overlapping assets that offer no diversification benefits. By removing or adjusting these, the portfolio can achieve better diversification. To move towards a riskier portfolio, consider increasing exposure to high-growth stocks, while a more conservative approach could involve adding bonds or other low-risk assets. Navigating along the efficient frontier allows for balancing risk and return, optimizing the portfolio's performance according to the investor's risk tolerance and financial goals.

Dividends Info

  • Apple Inc 0.40%
  • BlackRock Inc 2.00%
  • Alphabet Inc Class C 0.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.23%

The portfolio has a total dividend yield of 1.23%, with contributions from Apple, BlackRock, Alphabet, and the Vanguard ETFs. While the yield is modest, it provides a steady income stream that can enhance total returns. Dividends can also help cushion the impact of market volatility by providing regular cash flow. To increase the portfolio’s income potential, consider adding more dividend-paying stocks or funds. This can help balance growth with income, providing a more comprehensive investment approach.

Ongoing product costs Info

  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from low costs, with a total expense ratio (TER) of 0.04%, primarily due to the low expense ratios of the Vanguard ETFs. Keeping costs low is crucial for maximizing returns, as high fees can erode gains over time. This cost-efficient approach allows more of the portfolio’s returns to be reinvested, compounding growth over the long term. It’s important to regularly review and manage investment costs to ensure they remain as low as possible, thereby enhancing overall portfolio performance.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey