A growth-focused portfolio with significant tech exposure and low geographic diversity

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a high-risk tolerance focused on aggressive growth. Ideal for those with a long-term horizon, it prioritizes capital appreciation over income, leveraging significant exposure to U.S. large-cap equities. Such investors are comfortable with volatility and can withstand market fluctuations for the prospect of higher returns. This strategy is well-suited for individuals aiming to maximize growth, accepting the inherent risks of concentrated sector and geographic exposure.

Positions

  • Invesco QQQ Trust
    QQQ - US46090E1038
    70.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    30.00%

This portfolio is heavily weighted towards two ETFs: Invesco QQQ Trust, making up 70%, and Vanguard S&P 500 ETF at 30%. This composition leans heavily into large-cap U.S. equities, focusing on growth. While it reflects a growth-oriented strategy, it lacks diversification across different asset classes and regions. A typical balanced portfolio might include bonds or international stocks to mitigate risk. Consider diversifying into other asset classes like bonds or international equities to better balance risk and return.

Growth Info

Historically, this portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 17.56%. However, it has also experienced a maximum drawdown of -32.7%, indicating significant volatility. While past performance is not indicative of future results, understanding these trends can help set expectations. The strong historical performance aligns with the growth focus, but the volatility suggests a need for careful risk management. Consider periodic reviews to ensure the portfolio aligns with risk tolerance and investment goals.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes. With 1,000 simulations, the portfolio's 5th percentile return is 132.79%, while the 50th percentile is 695.03%. This method uses historical data to model future possibilities, though it cannot predict exact outcomes. The high median return reflects the growth potential, but the variance underscores potential risk. Regularly reassess risk tolerance and adjust allocations to align with evolving financial goals and market conditions.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is almost entirely invested in stocks, comprising 99.87%, with a negligible cash position. While stocks offer growth potential, they also introduce volatility. A more diversified asset allocation might include bonds or alternative investments to reduce risk. Compared to a balanced benchmark, this portfolio could benefit from a more varied asset mix. Consider adding fixed income or other asset classes to enhance diversification and potentially stabilize returns during market downturns.

Sectors

  • Technology
    46%
  • Telecommunications
    14%
  • Consumer Discretionary
    14%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Industrials
    5%
  • Financials
    4%
  • Utilities
    2%
  • Basic Materials
    1%
  • Energy
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, which makes up 45.64% of the allocation. This concentration can lead to higher volatility, especially during periods of tech market fluctuations. While technology has been a strong performer, a more balanced sector allocation can mitigate risk. Common benchmarks suggest a more even distribution across sectors. Consider reducing tech exposure and increasing allocations in underrepresented sectors to achieve greater balance and reduce risk.

Regions

  • North America
    98%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographically, the portfolio is primarily focused on North America, accounting for 98.27% of the exposure. This heavy concentration limits international diversification, which can buffer against regional economic downturns. Global benchmarks often include broader geographic exposure. Consider increasing investments in international markets to enhance diversification and potentially capture growth opportunities in emerging and developed non-U.S. regions.

Dividends

  • Invesco QQQ Trust 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.67%

The portfolio's dividend yield is relatively low at 0.67%, reflecting its growth focus. Dividends provide a steady income stream, which can be attractive for income-focused investors. However, for growth-oriented portfolios, capital gains are typically prioritized. While the current yield aligns with growth objectives, consider whether a higher dividend yield might support your financial goals, especially if income becomes a priority.

Ongoing product costs

  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is 0.15%, which is quite low and supports better long-term performance by minimizing costs. Lower fees mean more of your returns are retained, compounding over time. This cost efficiency is a positive aspect of the portfolio, aligning with best practices in cost management. Continue to monitor costs and explore opportunities to reduce fees further, ensuring expenses remain competitive as the portfolio evolves.

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.

The current asset allocation is not optimized on the Efficient Frontier, which seeks the best possible risk-return ratio. Given the high concentration in tech stocks, the portfolio could achieve a more efficient balance by adjusting allocations. Optimization involves reallocating existing assets to improve the risk-return profile without necessarily increasing diversification. Consider using optimization tools to explore potential adjustments, enhancing risk management while maintaining growth potential.

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