High Growth Potential Portfolio with Low Diversity and High Tech Exposure

Report created on Jul 28, 2024

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 heavily weighted towards equities, with 85% invested in the SPDR® Portfolio S&P 500 ETF and 15% in the Invesco PHLX Semiconductor ETF. This allocation indicates a strong emphasis on growth, focusing on large-cap U.S. stocks and the semiconductor industry. Such a concentration can lead to significant gains but also exposes the portfolio to higher volatility. Diversifying into different asset classes could help mitigate this risk and provide more stability during market downturns.

Growth Info

Historically, the portfolio has shown robust performance, with a compound annual growth rate (CAGR) of 11.99%. However, it has also experienced a significant maximum drawdown of -27.83%, indicating susceptibility to market corrections. This high volatility is typical for growth-focused portfolios. While past performance is not indicative of future results, these figures suggest the portfolio can generate substantial returns over time, albeit with considerable fluctuations. Investors should be prepared for potential short-term losses.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The median (50th percentile) end portfolio value was estimated at 603.59%, with a 5th percentile value of 21.79% and a 67th percentile value of 1,034.38%. These projections highlight the potential for significant growth, but also the range of possible outcomes. Monte Carlo simulations provide a probabilistic forecast, helping investors understand the variability and risk associated with their investments.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible amount of cash. This high equity exposure can drive substantial growth but also increases risk. Stocks tend to be more volatile than other asset classes like bonds or real estate. To balance risk and reward, incorporating a mix of asset classes could be beneficial. Adding bonds, for instance, could provide a buffer against market volatility and offer more consistent returns.

Sectors Info

  • Technology
    41%
  • Financials
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is highly concentrated in the technology sector, which makes up 41.37% of the holdings. Other sectors like financial services, healthcare, and consumer cyclicals have smaller allocations. This concentration in tech stocks can lead to impressive gains during bullish market conditions but also exposes the portfolio to sector-specific risks. Diversifying across more sectors could help reduce risk and provide more balanced growth opportunities.

Regions Info

  • North America
    98%
  • Europe Developed
    2%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly invested in North America, with 97.70% of assets allocated there. Minor allocations are in Europe Developed and Asia Developed. This heavy focus on the U.S. market means the portfolio is highly susceptible to economic and political events in the region. Diversifying into other geographic areas could mitigate regional risks and take advantage of growth opportunities in international markets.

Dividends Info

  • Invesco PHLX Semiconductor ETF 0.60%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.20%

The portfolio's dividend yield data wasn't provided, but typically, growth-focused portfolios have lower dividend yields. This is because they prioritize capital appreciation over income generation. Investors who rely on regular income might find this portfolio less suitable. If generating income is a goal, incorporating dividend-paying stocks or income-focused funds could be a strategic move.

Ongoing product costs Info

  • Invesco PHLX Semiconductor ETF 0.19%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are quite low, with a total expense ratio (TER) of 0.05%. The SPDR® Portfolio S&P 500 ETF has an expense ratio of 0.02%, while the Invesco PHLX Semiconductor ETF stands at 0.19%. Low costs are beneficial as they ensure more of the returns are retained by the investor. Keeping investment costs low is a crucial factor in long-term portfolio performance, as high fees can erode gains over time.

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