A concentrated tech-heavy portfolio with high growth potential and moderate risk exposure

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in equities, with a significant portion in ETFs and common stocks. The largest holding is the Invesco Aerospace & Defense ETF, making up over 30% of the portfolio. This is followed by substantial investments in Apple Inc. and Intel Corporation. Compared to typical benchmark compositions, this portfolio is less diversified, focusing heavily on a few high-growth assets. While this concentration can drive significant returns, it also increases risk. Consider diversifying across more asset classes to mitigate potential downturns and enhance stability.

Growth Info

Historically, the portfolio has shown strong performance, with a Compound Annual Growth Rate (CAGR) of 15.95%. This suggests robust growth potential relative to broader market indices. However, it also experienced a maximum drawdown of 36.2%, indicating susceptibility to market volatility. While past performance is not indicative of future results, understanding these trends can help manage expectations. To balance growth with risk, consider strategies to cushion against significant losses, such as diversifying holdings or incorporating defensive assets.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes. With 1,000 simulations, the median projected return is nearly 494%, while the 5th percentile suggests minimal losses. This method uses historical data to estimate future performance, though it's important to note that these are not guarantees. The portfolio shows a high likelihood of positive returns, but the variance highlights potential volatility. To align with personal risk tolerance, regularly reassess the portfolio's composition and adjust as necessary to maintain desired risk levels.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly weighted in stocks, comprising nearly 100% of the holdings, with negligible cash allocation. This heavy equity exposure can lead to substantial growth but also increases vulnerability to market swings. Compared to benchmarks, this lack of asset class diversification may amplify risk during downturns. Introducing fixed income or other asset classes could provide a buffer against volatility, offering more stable returns over time. Balancing growth with stability is key to optimizing long-term performance.

Sectors Info

  • Technology
    55%
  • Industrials
    27%
  • Telecommunications
    14%
  • Consumer Discretionary
    2%
  • Health Care
    1%
  • Financials
    1%

Technology dominates this portfolio, accounting for over 55% of its composition. This concentration can lead to higher returns during tech sector booms but also increases exposure to sector-specific risks, such as regulatory changes or tech market corrections. Other sectors, like industrials and communication services, offer some diversification but remain underrepresented. To reduce sector-specific risk, consider increasing exposure to sectors with lower current allocations. This strategy can help stabilize returns and mitigate the impact of tech sector volatility.

Regions Info

  • North America
    99%
  • Africa/Middle East
    1%

The portfolio is almost entirely focused on North America, with over 99% of its assets located there. This concentration limits exposure to global economic growth and may increase risk if the North American market underperforms. By diversifying geographically, you can tap into growth opportunities in emerging markets or regions with different economic cycles. Consider adding international assets to balance geographic risk and potentially enhance returns through global diversification.

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 has room for optimization on the Efficient Frontier, which aims to achieve the best possible risk-return ratio. Currently, a more efficient portfolio could yield an expected return of 26.73% with similar risk. The Efficient Frontier is a tool that helps in reallocating assets to maximize return for a given risk level. Consider rebalancing the portfolio to achieve this optimal mix, focusing on assets that offer a favorable risk-return profile. This strategy can enhance overall performance while maintaining desired risk exposure.

Dividends Info

  • Apple Inc 0.40%
  • Walt Disney Company 0.40%
  • Intel Corporation 2.00%
  • iShares Russell Top 200 Growth ETF 0.30%
  • Invesco Aerospace & Defense ETF 0.30%
  • Weighted yield (per year) 0.60%

The portfolio's dividend yield is relatively low, at 0.6%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation. For investors seeking regular income, increasing exposure to higher-yielding assets could be beneficial. However, if growth is the primary goal, maintaining the current focus on growth-oriented stocks may be appropriate. Regularly reviewing dividend yields can ensure alignment with income needs and investment objectives.

Ongoing product costs Info

  • iShares Russell Top 200 Growth ETF 0.20%
  • Invesco Aerospace & Defense ETF 0.58%
  • Weighted costs total (per year) 0.20%

The portfolio's costs are moderate, with the Total Expense Ratio (TER) at 0.2%, primarily driven by ETF fees. Lower costs can enhance long-term returns, as fees compound over time. Compared to industry averages, these costs are competitive, supporting better performance. Regularly reviewing the cost structure and seeking lower-cost alternatives, such as index funds or ETFs, can further optimize returns. Maintaining a focus on cost efficiency will help maximize the portfolio's growth potential over the long term.

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