A growth-focused portfolio with high tech exposure and limited geographic diversification

Report created on Dec 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 evenly split between two ETFs: Invesco QQQ Trust and Vanguard Total Stock Market Index Fund ETF Shares. This composition leans heavily towards equities, with minimal diversification across asset classes. Compared to a balanced portfolio, which might include bonds or alternative investments, this allocation is riskier but offers potential for higher returns. To enhance diversification and manage risk, consider integrating other asset classes such as bonds or real estate.

Growth Info

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 16.51%. This indicates strong growth, particularly in the tech-heavy Invesco QQQ Trust. However, with a maximum drawdown of -31.31%, the portfolio has experienced significant volatility. While past performance can guide expectations, it doesn't guarantee future results. To mitigate potential downturns, consider strategies that might stabilize returns, such as incorporating more defensive assets.

Projection Info

Using a Monte Carlo simulation with 1,000 runs, the portfolio's future potential was assessed. The median outcome suggests a portfolio value increase of 653%, with a high probability of positive returns. However, simulations rely on historical data, which may not fully predict future market conditions. To prepare for varying scenarios, regularly review and adjust the portfolio based on evolving economic landscapes and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, with almost no exposure to other asset classes. This lack of diversification can lead to higher risk, as all investments are tied to the equity market's performance. Compared to a more diversified portfolio, which includes bonds or commodities, this allocation may experience greater volatility. To spread risk, consider adding different asset classes, which can provide stability during market fluctuations.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    13%
  • Telecommunications
    12%
  • Health Care
    8%
  • Financials
    7%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily concentrated in technology, accounting for over 40% of the allocation. This focus can lead to increased volatility, especially during periods of tech market corrections. While tech offers high growth potential, diversifying into other sectors like healthcare or consumer defensive can help balance risk. Aligning sector weights more closely with broader benchmarks may enhance overall stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 98.65% exposure. This narrow focus limits international diversification, potentially missing out on growth opportunities in emerging markets. A global perspective can provide a buffer against regional economic downturns. To enhance geographic diversity, consider incorporating funds with broader international exposure, which can capture growth in underrepresented regions.

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 can be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio. This involves adjusting the allocation between existing assets to achieve maximum returns for a given level of risk. While this optimization focuses on current holdings, consider periodically revisiting the allocation to ensure it remains aligned with personal risk tolerance and market conditions.

Dividends Info

  • Invesco QQQ Trust 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.80%

The portfolio yields a modest average dividend of 0.8%, with contributions from both ETFs. While dividends provide a steady income stream, the focus here is more on growth than income generation. For investors seeking higher income, consider integrating high-dividend-paying stocks or funds. However, maintaining a balance between growth and income is crucial to meet long-term financial goals.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is impressively low at 0.12%, supporting better long-term performance by minimizing costs. Low fees are beneficial as they allow more of your investment returns to compound over time. However, continually monitoring for even lower-cost alternatives can further enhance net returns. Ensure that any changes align with the broader investment strategy and risk tolerance.

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