Balanced Growth Portfolio with Strong Technology Focus and Moderate Diversification

Report created on Jul 21, 2024

Risk profile Info

5/7
Growth
← Less risk More risk →

Diversification profile Info

3/5
Moderately Diversified
← Less diversification More diversification →

Positions

The portfolio is composed of a mix of ETFs and common stocks, with a significant emphasis on ETFs. The largest positions are in the WisdomTree India Earnings Fund and the Invesco NASDAQ 100 ETF, making up over half of the portfolio. This composition indicates a focus on growth-oriented investments with a significant tilt towards technology and emerging markets. The presence of individual stocks like Apple and Microsoft suggests an inclination towards high-growth tech giants. A moderately diversified approach is evident, but the heavy tech focus may expose the portfolio to sector-specific risks.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 15.19%, indicating robust performance over time. However, it has also experienced a maximum drawdown of -26.47%, highlighting potential volatility. The returns are concentrated, with just 15 days accounting for 90% of the returns, suggesting that the portfolio's performance is heavily reliant on a few high-return periods. This historical performance underscores the growth potential of the portfolio but also points to the inherent risks associated with its composition.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method provides a range of possible outcomes by simulating various market conditions. The results show a 5th percentile return of 8.43% and a 50th percentile return of 433.98%, with an annualized return of 15.29%. This suggests a high probability of positive returns, with 963 out of 1,000 simulations yielding gains. The projections indicate potential for substantial growth, but also remind of the variability and uncertainty inherent in investment outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, accounting for over 99% of the asset allocation, with a negligible amount in cash. This indicates a high-risk, high-reward strategy, typical of growth-oriented portfolios. The lack of diversification into other asset classes such as bonds or real estate could expose the portfolio to significant market volatility. To enhance stability and reduce risk, consider incorporating a broader range of asset classes, which could provide more balance and potentially smoother returns over time.

Sectors Info

  • Technology
    51%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Financials
    8%
  • Industrials
    4%
  • Energy
    4%
  • Health Care
    4%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Utilities
    3%
  • Real Estate
    1%

Sector allocation is heavily skewed towards technology, which makes up over 51% of the portfolio. Other sectors like consumer cyclicals and communication services also have notable allocations. While this focus on technology may drive growth, it also increases vulnerability to sector-specific downturns. The concentration in a few sectors suggests a need for diversification to mitigate risk. Balancing the exposure across a wider array of sectors could help cushion the portfolio against potential sector-specific declines and enhance overall stability.

Regions Info

  • North America
    73%
  • Asia Emerging
    27%

Geographically, the portfolio is predominantly invested in North America, with 72.69% exposure, and a significant portion in Asia Emerging markets at 26.74%. This reflects a strategic focus on developed markets with a growth component from emerging economies. While this geographic allocation may offer a balance of stability and growth, it lacks exposure to other regions like Europe or Latin America. To achieve a more globally diversified portfolio, consider increasing allocations to underrepresented regions, which may provide additional growth opportunities and risk mitigation.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Fidelity Covington Trust - Fidelity Magellan ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly within the technology-focused ETFs like the Invesco NASDAQ 100 ETF and Fidelity Magellan ETF. This high correlation suggests limited diversification benefits, as these assets tend to move in tandem. Reducing exposure to overlapping assets could enhance diversification and reduce risk. By identifying and minimizing these correlations, the portfolio could achieve a more balanced risk-return profile. Consider incorporating assets with low correlation to existing holdings to improve overall diversification and resilience to market 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.

Before optimizing, addressing the portfolio's high correlation within its technology-focused assets is crucial. Reducing overlapping positions could enhance diversification and stability. Moving along the efficient frontier can help achieve a riskier or more conservative stance. For a riskier portfolio, increase equity exposure, especially in high-growth sectors. Conversely, for a more conservative approach, consider incorporating fixed-income assets. Balancing risk and return is key. Focus on aligning the portfolio with personal risk tolerance and financial goals, ensuring it remains adaptable to changing market conditions and personal circumstances.

Dividends Info

  • Apple Inc 0.40%
  • Fidelity Covington Trust - Fidelity Magellan ETF 0.20%
  • Alphabet Inc Class A 0.20%
  • Microsoft Corporation 0.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Russell 2000 Index Fund ETF Shares 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.37%

The portfolio's dividend yield is relatively low at 0.37%, reflecting its growth-oriented nature. While high-growth stocks and ETFs may not prioritize dividends, this could limit income generation for investors seeking regular cash flow. The focus on capital appreciation rather than income is evident. To enhance income potential, consider incorporating dividend-paying stocks or ETFs. This could provide a steady income stream while maintaining exposure to growth opportunities. Balancing growth and income can create a more comprehensive investment strategy, catering to both long-term appreciation and short-term cash flow needs.

Ongoing product costs Info

  • WisdomTree India Earnings Fund 0.85%
  • Fidelity Covington Trust - Fidelity Magellan ETF 0.59%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.10%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.29%

The portfolio's total expense ratio (TER) is 0.29%, which is relatively low, indicating cost-efficient management. The highest cost is associated with the WisdomTree India Earnings Fund at 0.85%, while other ETFs have significantly lower costs. Managing costs is crucial for optimizing returns, as high fees can erode gains over time. The current TER suggests a focus on maintaining low investment costs, which is beneficial for long-term growth. Continually monitoring and optimizing the cost structure can further enhance net returns and contribute to the portfolio's overall performance.

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