A concentrated equity portfolio focused on US markets with high growth potential

Report created on Jan 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted in two ETFs: Vanguard S&P 500 UCITS Acc making up 70% and Invesco EQQQ NASDAQ-100 UCITS ETF Acc at 30%. This composition indicates a strong focus on large-cap US equities, reflecting a growth-oriented strategy. While it aligns with a balanced risk profile, the low diversification suggests a higher exposure to market-specific risks. A more diversified asset allocation might include bonds or alternative investments to mitigate volatility.

Growth Info

Historically, the portfolio has demonstrated impressive growth, with a Compound Annual Growth Rate (CAGR) of 17.36%. This performance surpasses many benchmarks, signifying robust returns. However, it also experienced a maximum drawdown of -17.83%, highlighting potential volatility. While past performance is a helpful indicator, it doesn't guarantee future results. Consider balancing high-growth assets with more stable investments to potentially reduce drawdown risks.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes based on historical data, with a median return of 977.01%. This model uses past market behavior to estimate future performance, though it can't account for unforeseen events. The positive results across all simulations indicate strong growth potential. However, diversification could help buffer against unexpected market downturns, enhancing the portfolio's resilience.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can lead to substantial returns but also implies higher risk. This single asset class focus lacks the risk mitigation benefits that bonds or other asset classes might provide. A diversified portfolio typically includes multiple asset classes to balance growth and stability. Consider integrating fixed income or alternative investments to achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    38%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    9%
  • Industrials
    6%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

Technology dominates the sector allocation at over 38%, followed by consumer cyclicals and communication services. This tech-heavy concentration could result in higher volatility, especially during interest rate fluctuations. While the sector composition aligns with growth trends, it might benefit from broader sector diversification. Balancing exposure across various sectors can reduce sector-specific risks and enhance stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The geographic allocation is overwhelmingly focused on North America, accounting for nearly 99% of the portfolio. This heavy concentration limits exposure to other potentially lucrative markets. While the US market has shown strong historical performance, diversifying into other regions could provide growth opportunities and reduce geographic risk. Consider adding exposure to Europe, Asia, or emerging markets for a more balanced global footprint.

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 benefit from Efficient Frontier optimization, which seeks the best risk-return ratio. Currently, its concentrated asset allocation might not fully utilize diversification benefits. By adjusting the weights of existing assets or adding new ones, the portfolio could achieve a more efficient balance. This doesn't necessarily mean adding more assets but optimizing the current mix for the best possible outcomes.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.15%

The portfolio's Total Expense Ratio (TER) is relatively low at 0.15%, which is advantageous for long-term performance. Lower costs mean more of the portfolio's returns are retained, enhancing compounding effects over time. This cost efficiency is a positive aspect, supporting better net returns. Regularly reviewing and minimizing costs ensures that the portfolio remains cost-effective, maximizing potential gains.

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