A high-growth portfolio with strong tech focus and limited diversification opportunities

Report created on Jan 5, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is an equal split between two ETFs, the Invesco QQQ Trust and the Vanguard S&P 500 ETF, each making up 50% of the total allocation. This composition leans heavily towards equities, which is typical for a growth-focused strategy. While such a concentration can drive high returns, it also increases exposure to market volatility. To balance this, consider adding other asset classes like bonds or alternative investments, which can offer stability and diversification.

Growth Info

Historically, the portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 16.68%, indicating strong past performance. However, it also experienced a maximum drawdown of -30.81%, reflecting significant risk during downturns. While past performance can guide expectations, it's important to remember it doesn't guarantee future results. To mitigate potential losses, consider incorporating assets with lower volatility or implementing a more diversified strategy.

Projection Info

The forward projection, based on 1,000 Monte Carlo simulations, shows a median expected growth of 732.9%. Monte Carlo simulations use historical data to model future outcomes, helping investors understand potential risks and rewards. While the portfolio shows a high likelihood of positive returns, with 993 simulations yielding gains, it's crucial to remember that these are estimates. Diversifying across more assets can help manage risks not captured in historical data.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for nearly 100% of the allocation, with a negligible amount in cash. This heavy stock allocation can drive growth but also increases sensitivity to market swings. Compared to a typical balanced portfolio, which might include bonds or real estate, this allocation lacks diversification. To reduce risk, consider introducing other asset classes that can provide stability and income during volatile periods.

Sectors Info

  • Technology
    42%
  • Telecommunications
    13%
  • Consumer Discretionary
    13%
  • Health Care
    8%
  • Financials
    7%
  • Consumer Staples
    6%
  • Industrials
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The sector allocation is heavily skewed towards technology, which comprises over 42% of the portfolio. This concentration can lead to high volatility, especially during periods of tech sector downturns. While tech stocks have driven substantial growth recently, it's wise to consider balancing this with exposure to other sectors such as healthcare or consumer staples, which can provide more consistent returns during economic fluctuations.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographic exposure is overwhelmingly concentrated in North America, with over 98% of the portfolio allocated there. This lack of international diversification can expose the portfolio to regional economic risks. Compared to global benchmarks, this allocation is underexposed to emerging markets and developed regions outside North America. Expanding geographic exposure can help mitigate risks associated with regional economic downturns and currency fluctuations.

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 potentially be optimized on the Efficient Frontier, which involves adjusting the weightings of current assets to achieve the best possible risk-return ratio. This doesn't necessarily mean adding new assets but reallocating existing ones. By modeling different scenarios, you might find an allocation that offers a better balance between risk and return, enhancing overall portfolio efficiency without sacrificing growth potential.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.90%

The portfolio's dividend yield is modest at 0.9%, with the Invesco QQQ Trust offering 0.6% and the Vanguard S&P 500 ETF providing 1.2%. While dividends are not the primary focus of a growth-oriented portfolio, they can offer a steady income stream. Investors seeking more income might explore higher-yielding investments, though this could require adjusting the growth focus slightly to balance income and capital appreciation.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, which is quite low and beneficial for long-term performance. Low costs mean more of your investment returns remain in your pocket, rather than being eaten away by fees. This cost efficiency aligns well with best practices, ensuring that the portfolio's growth potential is maximized. Regularly reviewing and comparing costs with similar products can help maintain this advantage.

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