A growth-oriented portfolio with high tech concentration and moderate geographic diversification

Report created on Dec 7, 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 weighted towards common stocks, with a notable concentration in large-cap tech companies like Microsoft, Amazon, and Alphabet. This suggests a strong focus on growth, as these companies are leaders in their industries and have a track record of innovation and expansion. However, the high concentration in a single sector may expose the portfolio to sector-specific risks. To balance this, consider adding non-tech stocks or other asset classes to enhance diversification and potentially reduce volatility.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 18.08%. This indicates strong past returns, driven largely by the tech sector's growth. However, the maximum drawdown of -40.46% highlights the potential for significant losses during market downturns. While past performance can provide insights, it's important to remember that it doesn't guarantee future results. To mitigate drawdown risks, consider strategies like diversification or setting stop-loss orders.

Projection Info

Monte Carlo simulations provide insights into potential future outcomes by using historical data to model different scenarios. With 1,000 simulations, the median (50th percentile) outcome suggests a potential growth of 276.24%, while the worst-case (5th percentile) could see a decline of 75.23%. Although 796 simulations showed positive returns, it's crucial to be aware of the inherent uncertainty in projections. Consider regularly reviewing and adjusting the portfolio based on changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can offer high returns but also come with increased risk. A 100% stock allocation may suit aggressive investors seeking growth, but it lacks the stability that bonds or other asset classes might provide. Diversifying across different asset classes can help manage risk and smooth out returns over time. Consider including fixed income or real estate investments to provide a buffer against market volatility and create a more balanced portfolio.

Sectors Info

  • Technology
    51%
  • Consumer Discretionary
    25%
  • Telecommunications
    14%
  • Consumer Staples
    7%
  • Industrials
    3%

With over 51% of the portfolio in the technology sector, there is a significant sector concentration. While tech companies have driven substantial growth, they can also be volatile and sensitive to economic changes. The portfolio also includes consumer cyclicals and defensive sectors, which can provide some balance. However, further diversification across more sectors could reduce risk. Consider exploring opportunities in sectors like healthcare or financials to mitigate the impact of tech sector volatility.

Regions Info

  • North America
    82%
  • Europe Developed
    11%
  • Asia Emerging
    8%

The portfolio is predominantly invested in North America, with some exposure to Europe and Asia. This geographic concentration may limit the benefits of international diversification, which can help reduce risk by spreading investments across different economies. While the current allocation reflects confidence in the U.S. market, consider increasing exposure to other regions to capture growth opportunities and hedge against regional economic downturns. Emerging markets, in particular, offer potential for higher returns.

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 Efficient Frontier concept can help optimize the portfolio by identifying the best risk-return tradeoff. By adjusting the allocation among existing assets, it's possible to achieve a more efficient portfolio. This doesn't necessarily mean adding new assets but reallocating between current holdings to improve the risk-return ratio. Regularly reviewing the portfolio's position on the Efficient Frontier can ensure it remains aligned with your risk tolerance and investment goals, potentially enhancing overall performance.

Dividends Info

  • Apple Inc 0.40%
  • ASML Holding NV 1.00%
  • Alibaba Group Holding Ltd 1.90%
  • Costco Wholesale Corp 2.00%
  • Alphabet Inc Class C 0.20%
  • Southwest Airlines Company 2.10%
  • Microsoft Corporation 0.50%
  • Qualcomm Incorporated 1.60%
  • Weighted yield (per year) 0.74%

The portfolio's dividend yield is relatively low at 0.74%, reflecting its growth orientation. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. Investors seeking regular income might consider adding higher-yielding stocks or dividend-focused funds to complement the growth strategy. Balancing growth and income can enhance total returns and provide a cushion during periods of market volatility.

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