A high-risk portfolio with significant tech exposure and moderate diversification potential

Report created on Jan 16, 2025

Risk profile Info

6/7
Aggressive
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 small allocation to ETFs. The top holdings include Advanced Micro Devices and Nu Holdings, indicating a strong focus on technology and financial services. Compared to typical aggressive portfolios, this one is moderately diversified, with a notable concentration in a few high-risk stocks. To enhance diversification, consider adding more ETFs or bonds, which can offer stability and reduce volatility.

Growth Info

Historically, the portfolio has achieved a CAGR of 7.49%, which is moderate for an aggressive strategy. However, the maximum drawdown of -43.71% highlights significant volatility. This performance suggests the portfolio can deliver growth but is susceptible to market downturns. Comparing this to a benchmark like the S&P 500, which typically offers lower drawdowns, suggests a need for diversification to stabilize returns.

Projection Info

Using Monte Carlo simulations, which estimate future performance based on historical data, the portfolio's potential outcomes vary widely. With a median projection of -76.09%, the simulations suggest a high risk of underperformance. While 256 out of 1,000 simulations show positive returns, the overall annualized return is 4.97%. This indicates the need for adjustments to improve expected outcomes, such as reducing exposure to highly volatile assets.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with minimal cash holdings. This lack of asset class diversification increases risk, as stocks are prone to market fluctuations. A well-diversified portfolio typically includes bonds or alternative assets to hedge against volatility. Consider adding other asset classes to balance risk and improve stability, especially during market downturns.

Sectors Info

  • Technology
    32%
  • Health Care
    23%
  • Financials
    21%
  • Industrials
    10%
  • Consumer Discretionary
    7%
  • Telecommunications
    5%
  • Consumer Staples
    1%

Technology dominates the sector allocation at over 31%, with healthcare and financial services also heavily represented. This concentration may lead to higher volatility, especially if these sectors face downturns. Compared to benchmarks, this allocation is less balanced. To mitigate sector-specific risks, consider diversifying into less represented sectors like consumer defensives or utilities.

Regions Info

  • North America
    76%
  • Latin America
    11%
  • Europe Developed
    8%
  • Asia Developed
    5%

Geographically, the portfolio is heavily invested in North America, with limited exposure to other regions. This concentration may miss out on growth opportunities in emerging markets or Europe. A more geographically diverse portfolio can reduce country-specific risks and capture global growth. Consider increasing allocations in underrepresented regions to enhance diversification.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, such as the Vanguard S&P 500 ETF and Vanguard Russell 1000 Growth Index Fund ETF Shares. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this can amplify losses. To improve risk management, consider replacing one with a less correlated asset to enhance 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 could be optimized using the Efficient Frontier, which suggests a more efficient risk-return ratio. The current setup has overlapping assets that don't enhance diversification. By reallocating to achieve an expected return of 12.28% with a similar risk level, the portfolio can potentially improve performance. Focus on reducing asset overlap and increasing diversification to achieve this.

Dividends Info

  • Dolby Laboratories 1.50%
  • iShares Russell 2000 ETF 1.10%
  • Perrigo Company PLC 4.70%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Clear Secure Inc 2.80%
  • Weighted yield (per year) 0.86%

The portfolio's dividend yield is relatively low at 0.86%, with Perrigo Company PLC contributing the highest yield at 4.7%. For aggressive growth investors, dividends may not be a primary focus, but they can provide a steady income stream and reduce overall volatility. Consider balancing growth stocks with higher-yielding assets to enhance income potential.

Ongoing product costs Info

  • iShares Russell 2000 ETF 0.19%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.01%

The portfolio's cost structure is efficient, with low expense ratios for ETFs like the Vanguard S&P 500 ETF at 0.03%. Keeping costs low is crucial for maximizing long-term returns. The current cost setup is well-aligned with best practices, supporting better performance. Continue monitoring fees to ensure they remain competitive and explore lower-cost alternatives if available.

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