A growth-oriented portfolio with high technology exposure and significant geographic concentration

Report created on Jan 16, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a total of 96.5% allocated to stocks. This composition is common for growth-focused portfolios, as equities generally offer higher potential returns over the long term. However, the lack of diversification across asset classes, with minimal exposure to bonds or other asset types, could increase vulnerability during market downturns. To enhance stability, consider introducing a small proportion of fixed-income assets or alternative investments.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 17.14%. This indicates robust past performance, likely driven by the high equity exposure. However, the maximum drawdown of -36.4% reveals significant volatility, a common trait in growth portfolios. While past performance can offer insights, it's important to remember that it doesn't guarantee future results. It's advisable to evaluate if this level of risk aligns with your financial goals and risk tolerance.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with a median return of 785.7%. This method uses historical data to simulate future performance, providing a probabilistic view of potential returns. While the median projection is positive, the 5th percentile shows a potential loss of -49.58%, highlighting the inherent risk. It's crucial to understand that simulations are not predictions and should be used as one of many tools in assessing future performance.

Asset classes Info

  • Stocks
    97%
  • Other
    3%

The portfolio's allocation is heavily skewed towards stocks, with negligible exposure to other asset classes. This can lead to higher returns during bull markets but also increases risk during downturns. Compared to benchmark norms, which typically include a mix of stocks and bonds, this portfolio lacks diversification. Introducing other asset classes, such as bonds or real estate, could help balance risk and reward, providing a smoother return profile over time.

Sectors Info

  • Technology
    42%
  • Financials
    18%
  • Telecommunications
    8%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    1%

Technology dominates the sector allocation, comprising 41.72% of the portfolio. This concentration can lead to higher volatility, especially during market conditions that negatively impact tech stocks. While the tech sector has been a strong performer, it's important to diversify across other sectors to mitigate risk. Balancing exposure to sectors like healthcare, consumer goods, or industrials could provide more stability and reduce reliance on one sector's performance.

Regions Info

  • North America
    96%
  • Asia Developed
    2%
  • Europe Developed
    1%
  • Australasia
    1%

The portfolio is primarily concentrated in North America, with 96.2% exposure. This geographic focus limits diversification and could expose the portfolio to regional economic risks. While North America has been a strong market, global diversification can reduce risk and capture growth opportunities in other regions. Consider increasing exposure to international markets, such as Europe or Asia, to enhance diversification and potentially improve long-term returns.

Redundant positions Info

  • iShares Core S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    Invesco QQQ Trust
    High correlation

The portfolio contains highly correlated assets, particularly among the iShares Core S&P 500 ETF, Vanguard Growth Index Fund ETF Shares, and Invesco QQQ Trust. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, this could lead to larger losses. Reducing overlap by selecting assets with lower correlation can enhance diversification, providing a more stable performance across different market conditions.

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's risk-return profile could be optimized by addressing asset overlap and considering the Efficient Frontier, which represents the best possible risk-return ratio. By reallocating within existing assets, the expected return could increase to 44.14% with a similar risk level. This optimization doesn't necessarily imply adding new assets but rather adjusting current allocations for better efficiency. Ensure these changes align with your risk tolerance and investment goals.

Dividends Info

  • iShares Core S&P 500 ETF 1.30%
  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Value Index Fund ETF Shares 2.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.91%

The portfolio's dividend yield is relatively low at 0.91%, reflecting its growth orientation. While dividends can provide a steady income stream, they are less of a focus in growth portfolios, which prioritize capital appreciation. If income generation is a goal, consider increasing allocation to dividend-paying assets. However, ensure that this aligns with your overall investment strategy and risk tolerance, as higher dividends often come with different risk profiles.

Ongoing product costs Info

  • First Trust SkyBridge Crypto Industry and Digital Economy ETF 0.85%
  • Invesco Dynamic Software ETF 0.60%
  • iShares Core S&P 500 ETF 0.03%
  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.22%

The portfolio's Total Expense Ratio (TER) is 0.22%, which is relatively low. This is beneficial for long-term performance, as lower costs mean more of your returns are retained. The iShares Core S&P 500 ETF and Vanguard ETFs contribute significantly to this low TER. However, some funds, like the First Trust SkyBridge Crypto Industry ETF, have higher fees. Consider whether these higher-cost funds are providing sufficient value to justify their expense.

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