A high-risk aggressive portfolio with significant concentration in North American equities

Report created on Jan 23, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of mutual funds, with Oppenheimer Flexible Strategies Fund A holding the largest share at 19%. The portfolio leans heavily towards equities, reflecting its aggressive nature. Compared to a typical benchmark, this portfolio has a higher concentration in funds, which may limit direct control over individual asset allocation. This structure aligns with the aggressive risk profile, aiming for high returns but with potentially higher volatility. To enhance diversification, consider introducing more direct investments or funds with broader asset class exposure.

Growth Info

The portfolio's historical performance shows a remarkable CAGR of 34.44%, indicating strong past returns. However, the max drawdown of -77.84% highlights significant risk, meaning the portfolio experienced steep losses during downturns. While past performance can offer insights, it does not guarantee future results. Comparing this to a benchmark helps understand the risk-return balance. To mitigate potential losses, consider incorporating more stable assets that can cushion against extreme market fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, show varying results for this portfolio. The median projection suggests a possible decline, while only 339 out of 1,000 simulations show positive returns. This highlights the uncertainty and potential volatility of future performance. While such simulations provide a range of outcomes, they are not foolproof predictors. To better prepare for future scenarios, consider adjusting the portfolio to include more defensive assets that could perform well in different market conditions.

Asset classes Info

  • Stocks
    67%
  • Bonds
    21%
  • Cash
    2%
  • Other
    2%
  • No data
    1%

The portfolio is heavily weighted towards stocks at 67%, with bonds making up 21%, and cash and other assets comprising the remainder. This allocation reflects a strong preference for growth, but it also means higher exposure to market volatility. Compared to a balanced benchmark, this allocation lacks diversification. Incorporating more bonds or alternative investments could provide a buffer against equity market downturns, helping to stabilize returns over time.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Energy
    9%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Discretionary
    7%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Utilities
    4%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is tech-heavy, with 24% allocated to the technology sector, followed by financial services at 16%. This concentration may lead to higher volatility, especially during periods of interest rate changes or tech sector corrections. In comparison to common benchmarks, this allocation is skewed towards growth sectors. To balance this, consider increasing exposure to more defensive sectors like consumer staples or utilities, which can offer stability in uncertain times.

Regions Info

  • North America
    74%
  • Latin America
    12%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Australasia
    1%

With 74% of assets in North America, the portfolio is significantly overweight in this region compared to global benchmarks. This concentration increases exposure to regional risks and limits diversification benefits. The limited exposure to other regions like Europe and Asia suggests potential for geographic diversification. To reduce regional risk, consider adding investments in emerging markets or underrepresented regions, which could provide growth opportunities and enhance diversification.

Market capitalization Info

  • Mega-cap
    26%
  • Mid-cap
    20%
  • Large-cap
    18%
  • Small-cap
    5%

The portfolio is diversified across market capitalizations, with a focus on mega-cap stocks at 26% and medium caps at 20%. This provides a mix of stability and growth potential. However, the small cap exposure is relatively low at 5%. Compared to benchmarks, this allocation may miss out on the growth opportunities often found in smaller companies. To capture potential high-growth opportunities, consider increasing small-cap exposure, which can offer significant returns, albeit with higher risk.

Redundant positions Info

  • Oppenheimer Main St Opp A
    Oppenheimer Main Street Fund Class A
    High correlation

The portfolio contains highly correlated assets, particularly between Oppenheimer Main St Opp A and Oppenheimer Main Street Fund Class A. High correlation means these funds tend to move in tandem, reducing diversification benefits. In downturns, this can lead to larger losses as the lack of diversification becomes apparent. To enhance risk management, consider replacing one of these funds with an asset that offers a different return profile, thus improving overall portfolio diversification.

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 current structure may not be on the Efficient Frontier, which represents the best possible risk-return ratio. By adjusting the allocation of existing assets, it's possible to optimize for a more efficient portfolio. This means achieving higher expected returns for the same level of risk or maintaining returns while lowering risk. Consider rebalancing to ensure the portfolio is aligned with your risk tolerance and return objectives.

Dividends Info

  • AIM Investment Securities Funds (Invesco Investment Securities Funds) - Government Money Market Fund 4.00%
  • Oppenheimer Main Street Fund Class A 0.70%
  • Oppenheimer Main St Opp A 0.10%
  • Oppenheimer Strat Income Fund 4.50%
  • Weighted yield (per year) 0.94%

The portfolio's overall dividend yield is 0.94%, primarily driven by the Oppenheimer Strat Income Fund and the AIM Government Money Market Fund. While dividends contribute to returns, they are relatively low in this portfolio, reflecting its focus on growth rather than income. For investors seeking income, consider increasing exposure to high-dividend funds or stocks, which can provide a steady income stream and potentially reduce reliance on capital gains.

Ongoing product costs Info

  • Oppenheimer Main Street Fund Class A 0.80%
  • Oppenheimer Main St Opp A 1.06%
  • Oppenheimer Main Street Mid Cap Fund Cl 1.06%
  • Oppenheimer Glabal A Fund 1.06%
  • Oppenheimer Strat Income Fund 1.05%
  • Oppenheimer Capital Appreciation A 0.94%
  • Oppenheimer Flexible Strategies Fd A 1.38%
  • INVESCO VALUE OPPORTUNITIES FUND CLASS A 1.07%
  • Weighted costs total (per year) 1.00%

With a total expense ratio (TER) of 1.00%, the portfolio's costs are moderate but could be optimized. The Oppenheimer Flexible Strategies Fund A has the highest individual cost at 1.38%. Reducing these costs can significantly impact long-term performance, as lower fees mean more of your returns are kept. Consider switching to lower-cost funds or negotiating fees where possible to enhance net returns.

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