Concentrated portfolio with strong growth potential but limited geographic and sector diversification

Report created on Feb 5, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in a few stocks, with Intel Corporation alone making up 35% of the portfolio. The remaining assets are spread across six other companies, with a notable presence of Griffon Corporation at 30%. Such concentration can lead to higher risk if any single company underperforms. A more balanced portfolio would typically diversify across more companies and sectors to mitigate this risk. To enhance diversification, consider allocating funds to additional stocks or other asset classes, which can help reduce volatility and improve long-term stability.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.44%, outperforming many benchmarks. However, it has also experienced a significant maximum drawdown of -39.25%, indicating vulnerability during market downturns. While strong growth is appealing, the high drawdown highlights the importance of risk management. To improve resilience, consider diversifying holdings to include assets with different risk profiles, which can help cushion against future market volatility.

Projection Info

The Monte Carlo simulation projects potential future outcomes based on historical data, with an annualized return of 18.25% across simulations. While the median outcome is promising, the 5th percentile indicates a potential loss of -37.2%. This highlights the uncertainty and variability of future returns. It's crucial to remember that simulations are not guarantees. To better align the portfolio with desired outcomes, consider adjusting asset allocations based on personal risk tolerance and investment goals to navigate potential market fluctuations.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking exposure to other asset classes such as bonds or real estate. While stocks can offer high growth potential, they also come with increased volatility. A diversified portfolio typically includes a mix of asset classes to balance risk and return, providing stability during market downturns. Consider introducing other asset classes to the portfolio to enhance diversification, which can help reduce overall risk and improve long-term returns.

Sectors Info

  • Industrials
    45%
  • Technology
    40%
  • Financials
    10%
  • Consumer Discretionary
    5%

The portfolio is heavily weighted towards the industrials and technology sectors, which together account for 85% of the total allocation. This concentration may increase risk, especially if these sectors face economic challenges. While sector-specific investments can lead to high returns during boom periods, they also expose the portfolio to sector-specific downturns. To mitigate this risk, consider diversifying into additional sectors, which can provide a buffer against sector-specific volatility and enhance overall portfolio stability.

Regions Info

  • North America
    100%

With 100% of the portfolio's assets allocated to North America, there is limited geographic diversification. This concentration may expose the portfolio to region-specific economic and political risks. While the U.S. market has historically performed well, global diversification can provide exposure to growth opportunities in other regions and reduce risk associated with any single market. Consider adding international equities or funds to the portfolio to increase geographic diversification and capitalize on global growth trends.

Market capitalization Info

  • Large-cap
    70%
  • Mid-cap
    30%

The portfolio predominantly consists of large-cap stocks, accounting for 70% of the allocation, with the remaining 30% in mid-cap stocks. Large-cap stocks often provide stability and steady returns, while mid-cap stocks can offer higher growth potential but with increased volatility. A balanced exposure across different market capitalizations can enhance diversification and optimize risk-adjusted returns. Consider incorporating small-cap stocks, which can provide additional growth opportunities and further diversify the portfolio.

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 be optimized using the Efficient Frontier, which identifies the best risk-return ratio for a given level of risk. Currently, a more efficient portfolio could achieve an expected return of 21.08% with a risk level of 23.35%. This suggests there is room for improvement in balancing risk and return. Consider reallocating assets to achieve a more optimal balance, which can enhance returns without increasing risk. This approach focuses on maximizing efficiency rather than diversification or other specific goals.

Dividends Info

  • Griffon Corporation 0.80%
  • Intel Corporation 1.90%
  • Leidos Holdings Inc 1.10%
  • Lennar Corporation 1.10%
  • L3Harris Technologies Inc 2.20%
  • Lockheed Martin Corporation 2.80%
  • MetLife Inc 1.90%
  • Weighted yield (per year) 1.56%

The portfolio has a modest dividend yield of 1.56%, with individual yields ranging from 0.80% to 2.80%. Dividends can provide a steady income stream, especially important for investors seeking regular cash flow. However, the focus on growth suggests that dividends may not be a primary concern. If income is a priority, consider reallocating towards higher-yielding stocks or funds. Alternatively, reinvesting dividends can compound returns over time, enhancing the growth potential of the portfolio.

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