A growth-focused portfolio with balanced global exposure and strong tech sector influence
Report created on Dec 20, 2024Risk profile
5/7
Diversification profile
4/5
Positions
-
QQ Invesco QQQ Trust
QQQ - US46090E1038 50.00% -
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 50.00%
This portfolio consists of two ETFs: Invesco QQQ Trust and Vanguard Total World Stock Index Fund, each holding a 50% share. This composition offers a blend of U.S. technology stocks and global equity exposure, aligning with a growth profile. The high concentration in technology through the Invesco QQQ Trust suggests a focus on capital appreciation. Compared to typical growth portfolios, this setup is moderately diversified, providing exposure to different sectors and regions. To enhance diversification, consider adding a fixed-income component, which could help balance risk and provide stability during market fluctuations.
Growth
Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.73%. This impressive growth reflects the strong performance of the technology sector in recent years. However, the portfolio has also experienced a significant maximum drawdown of -32.0%, indicating potential volatility. The concentration in tech-heavy assets can lead to large swings in value. It's important to recognize that past performance is not a guarantee of future results. Diversifying further could help mitigate such large drawdowns in the future.
Projection
Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, this portfolio shows a wide range of possible returns. The median outcome suggests a potential growth of 548.86%, with a high probability of positive returns. However, it's crucial to understand that these projections rely on historical data and assumptions, which may not account for future market changes. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions and personal investment goals.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is heavily skewed towards stocks, with 99.45% in equities and a negligible amount in cash and other asset classes. While a high equity allocation aligns with growth objectives, it also increases exposure to market volatility. Compared to balanced portfolios, this lack of asset class diversification may lead to higher risk. Introducing bonds or alternative investments could provide a buffer against equity market downturns and enhance overall portfolio stability.
Sectors
- Technology 38%
- Consumer Discretionary 13%
- Telecommunications 12%
- Financials 8%
- Health Care 8%
- Industrials 7%
- Consumer Staples 6%
- Basic Materials 3%
- Energy 2%
- Utilities 2%
- Real Estate 2%
Technology dominates the sector allocation at 37.82%, followed by consumer cyclicals and communication services. This concentration in tech can drive growth but also heightens vulnerability to sector-specific downturns, especially during periods of interest rate hikes or regulatory changes. Balancing the sector allocation by increasing exposure to underrepresented areas like healthcare or utilities could reduce risk and provide more consistent returns across different market conditions.
Regions
- North America 82%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Latin America 1%
- Africa/Middle East 1%
The portfolio's geographic allocation is heavily weighted towards North America, comprising 81.75% of the total. While this aligns with the U.S.-centric focus of the Invesco QQQ Trust, it may limit exposure to growth opportunities in emerging markets. Diversifying geographically by increasing allocations to regions like Asia or Latin America could capture growth potential and reduce reliance on any single economy. This broader exposure can enhance risk-adjusted returns over time.
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.
This portfolio can be optimized using the Efficient Frontier, which helps identify the best risk-return tradeoff for the given assets. By adjusting the allocation between the two ETFs, it's possible to achieve a more efficient portfolio that maximizes returns for a given level of risk. This optimization focuses on the current assets and their potential allocation changes, ensuring the portfolio remains aligned with growth objectives while managing risk effectively.
Dividends
- Invesco QQQ Trust 0.40%
- Vanguard Total World Stock Index Fund ETF Shares 1.20%
- Weighted yield (per year) 0.80%
The portfolio's dividend yield is relatively low at 0.8%, reflecting its growth-oriented strategy. While dividend income is not a primary focus, it can still provide a steady cash flow and help cushion against market volatility. Investors seeking higher income may consider adding dividend-focused assets to the portfolio. Balancing growth and income can lead to a more resilient investment strategy that supports long-term financial goals.
Ongoing product costs
- Invesco QQQ Trust 0.20%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.14%
With a total expense ratio (TER) of 0.14%, this portfolio is cost-efficient. Low costs are crucial for maximizing long-term returns, as high fees can erode gains over time. This competitive TER is a positive aspect, supporting better net returns compared to higher-cost alternatives. Maintaining this low-cost structure while exploring additional diversification options can enhance overall portfolio performance without significantly increasing expenses.
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