High momentum focus with significant leverage and a tilt towards mid-cap exposure

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 and a focus on capital growth over income. Ideal for those with a longer investment horizon, it caters to individuals comfortable with significant market fluctuations and the potential for high returns. The strategy requires a proactive investment approach, given the volatility associated with momentum investing and the use of leveraged ETFs. It's best suited for those who can monitor their investments closely and respond to market changes.

Positions

  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    45.00%
  • Invesco S&P MidCap Momentum ETF
    XMMO - US46137V4648
    45.00%
  • Direxion Daily Mid Cap Bull 3X Shares
    MIDU - US25459W7305
    5.00%
  • Direxion Daily S&P500® Bull 3X Shares
    SPXL - US25459W8626
    5.00%

This portfolio is heavily concentrated in momentum strategies within the U.S. equity market, with a significant allocation towards mid-cap stocks. The use of leveraged ETFs introduces a higher degree of risk and potential for volatility. The focus on momentum, characterized by investing in securities that have had higher recent price performance, is evident with 90% of the portfolio dedicated to Invesco's S&P 500 and MidCap Momentum ETFs. The remaining 10% is allocated to leveraged ETFs targeting mid-cap and S&P 500 indices, aiming to amplify daily index returns, which can significantly impact the portfolio's short-term performance.

Growth Info

The portfolio has exhibited a high Compound Annual Growth Rate (CAGR) of 23.48%, though it's accompanied by a substantial maximum drawdown of -40.85%. This indicates a high reward but with equally high risk, as evidenced by the days contributing to 90% of returns being concentrated in just 34 days. Such performance suggests that while the strategy can yield considerable gains, it also poses a risk of significant losses, underlining the importance of understanding the volatility and the timing of market movements.

Projection Info

Monte Carlo simulations, which use historical data to project potential future outcomes, show a wide range of possible returns for this portfolio. With 944 out of 1,000 simulations yielding positive returns, the median projection suggests a substantial potential upside. However, the presence of a 5th percentile outcome at -11.0% underscores the risk of loss. Investors should note that while simulations can provide insight, they cannot guarantee future performance due to the inherent unpredictability of markets.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%

The portfolio's asset allocation is almost entirely in stocks (99%), with a minimal cash holding. This allocation underscores a growth-focused strategy with a high-risk tolerance. The absence of fixed-income securities or alternative investments limits diversification, potentially increasing volatility and risk. Including a broader range of asset classes could help mitigate risk without significantly compromising growth potential.

Sectors Info

  • Financials
    22%
  • Technology
    19%
  • Industrials
    17%
  • Consumer Discretionary
    12%
  • Consumer Staples
    9%
  • Telecommunications
    7%
  • Health Care
    6%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    2%
  • Basic Materials
    1%

The sector allocation shows a diversified spread across financial services, technology, and industrials, which are typically associated with higher growth but also higher volatility. The underrepresentation of more defensive sectors like utilities and healthcare may contribute to the portfolio's higher risk profile. Balancing growth-oriented sectors with defensive ones could provide more stability during market downturns.

Regions Info

  • North America
    99%
  • Latin America
    1%
  • Europe Developed
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographic exposure is almost entirely North American (99%), with a negligible allocation to Latin America. This concentration in a single region, while potentially capitalizing on domestic growth, limits global diversification. Expanding geographic exposure, especially to developed and emerging markets outside North America, could reduce systemic risk and tap into global growth opportunities.

Market capitalization Info

  • Small-cap
    28%
  • Mega-cap
    27%
  • Mid-cap
    26%
  • Large-cap
    16%
  • Micro-cap
    0%

The portfolio's market capitalization exposure is well-balanced across small, medium, mega, and big caps, with a notable absence of micro-cap investments. This distribution suggests a strategy that seeks to blend the growth potential of smaller companies with the stability of larger firms. However, the significant allocation to mid-cap stocks may increase volatility, given their potentially higher growth and risk compared to large caps.

Dividends Info

  • Direxion Daily Mid Cap Bull 3X Shares 1.40%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Direxion Daily S&P500® Bull 3X Shares 0.80%
  • Invesco S&P MidCap Momentum ETF 0.70%
  • Weighted yield (per year) 0.70%

The portfolio's dividend yield stands at 0.70%, which is relatively low, reflecting the growth-oriented nature of the investments. While dividends contribute to total returns, the focus here is clearly on capital appreciation. Investors seeking income in addition to growth might consider a higher allocation to dividend-yielding assets.

Ongoing product costs Info

  • Direxion Daily Mid Cap Bull 3X Shares 1.03%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Direxion Daily S&P500® Bull 3X Shares 0.91%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.31%

The portfolio's costs vary significantly across the different ETFs, with the leveraged ETFs having higher expense ratios. The total expense ratio (TER) of 0.31% is reasonable for a growth-oriented strategy, especially considering the potential for higher returns. However, investors should be mindful of the impact of higher costs on leveraged ETFs over time, particularly during periods of market volatility.

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.

Optimizing this portfolio using the Efficient Frontier could identify allocation adjustments that offer a better risk-return trade-off. Given the current high-risk, high-reward setup, there may be opportunities to maintain or even enhance returns while reducing volatility through strategic rebalancing or diversification. This approach can help in achieving the most efficient use of capital by maximizing returns for a given level of risk.

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