Growth-Oriented Portfolio with High Technology Exposure and Moderate Diversification for Risk-Tolerant Investors

Report created on Dec 3, 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 heavily concentrated in ETFs, with a focus on growth-oriented investments. This includes a significant allocation to the Vanguard Mega Cap Growth Index Fund ETF and the Invesco NASDAQ 100 ETF, making up over 60% of the portfolio. There is also a modest allocation to individual stocks such as British American Tobacco and Alphabet Inc. This composition suggests a growth-focused strategy, with a strong emphasis on large-cap stocks. A diversified approach could enhance stability, but the current setup aligns with a high-growth objective.

Growth Info

Historically, the portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 18.88%. However, this high return comes with significant volatility, as indicated by a maximum drawdown of 30.21%. Such performance metrics highlight the potential for substantial gains, albeit with considerable risk. For investors comfortable with volatility, this portfolio's past performance may be appealing. To balance risk and reward, it is crucial to evaluate whether the risk is aligned with individual investment goals and risk tolerance.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the portfolio's projected annualized return is 27.53%. The median outcome suggests a potential growth of 1,770.34%, with positive returns in 998 simulations. This forward-looking analysis indicates a high probability of continued growth, though it is essential to consider the inherent risks. Investors should be cautious of over-relying on projections and ensure the portfolio aligns with their risk appetite.

Asset classes Info

  • Stocks
    100%

The portfolio is nearly entirely invested in stocks, accounting for 99.92% of the total allocation. This heavy stock exposure suggests a high-risk, high-reward strategy, typical of growth-focused portfolios. While stocks can offer substantial returns, they also come with greater volatility. Investors looking to reduce risk might consider incorporating other asset classes, such as bonds, to add stability. Diversifying asset classes can help cushion against market downturns and provide a more balanced risk-return profile.

Sectors Info

  • Technology
    48%
  • Telecommunications
    14%
  • Consumer Staples
    11%
  • Consumer Discretionary
    11%
  • Health Care
    6%
  • Financials
    3%
  • Energy
    3%
  • Industrials
    2%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is significantly weighted towards the technology sector, comprising nearly 48% of the total allocation. This concentration can lead to substantial returns in a booming tech market but also increases vulnerability to sector-specific downturns. Other sectors like communication services and consumer defensive are also represented but to a lesser extent. A more balanced sector allocation could mitigate risk and enhance diversification. Investors should assess their comfort with sector concentration and consider broadening exposure to other industries.

Regions Info

  • North America
    90%
  • Europe Developed
    9%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with nearly 90% of assets allocated to this region. While this concentration benefits from exposure to a stable and growing market, it limits diversification across global markets. Exposure to Europe and Asia is minimal, which could lead to missed opportunities in emerging markets. Investors seeking broader geographic diversification may consider increasing allocations to international markets to balance regional risks and capture global growth potential.

Redundant positions Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    Invesco QQQ Trust
    High correlation

The portfolio includes several highly correlated assets, particularly among the ETFs focused on mega-cap growth and technology. This correlation suggests that these assets tend to move in tandem, offering limited diversification benefits. While correlated assets can amplify returns in a rising market, they can also increase risk during downturns. To enhance diversification, investors might consider reducing overlapping positions and incorporating assets with lower correlation to the existing holdings. This strategy can improve risk management and portfolio resilience.

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 benefit from optimization, focusing on reducing overlapping and highly correlated assets that limit diversification. By aligning the portfolio along the efficient frontier, investors can achieve a more balanced risk-return profile. Moving towards a riskier portfolio involves increasing exposure to high-growth assets, while a more conservative approach would involve incorporating more stable, income-generating assets. Before optimizing, it's crucial to address asset correlation and consider enhancing diversification across sectors and geographies to improve overall efficiency.

Dividends Info

  • Bristol-Myers Squibb Company 4.00%
  • British American Tobacco p.l.c. 7.80%
  • Alphabet Inc Class C 0.20%
  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.40%
  • Invesco QQQ Trust 0.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Exxon Mobil Corp 2.40%
  • Weighted yield (per year) 1.19%

The portfolio's overall dividend yield stands at 1.19%, with notable contributions from British American Tobacco and Exxon Mobil Corp. While dividends provide a steady income stream, the focus on growth stocks suggests a preference for capital appreciation over income. Investors relying on dividends for income may find this yield insufficient. To increase the income component, one could consider reallocating towards higher-yielding assets. However, this should be balanced with the growth objectives and risk tolerance of the portfolio.

Ongoing product costs Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.07%
  • Invesco QQQ Trust 0.20%
  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.11%

The portfolio's costs are relatively low, with a total expense ratio (TER) of 0.11%. This low-cost structure is advantageous, as it minimizes the drag on returns. The largest cost contributors are the VanEck Semiconductor ETF and the Invesco QQQ Trust. Keeping investment costs low is crucial for maximizing net returns over time. Investors should continue to monitor expense ratios and consider cost-effective alternatives when rebalancing. Maintaining a focus on low-cost investments can enhance long-term portfolio performance.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey