An aggressive portfolio with high tech concentration and limited geographic diversification

Report created on Mar 27, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with 100% of its allocation in stocks. The Vanguard S&P 500 ETF holds the largest share at 28.21%, followed by the Invesco QQQ Trust at 19.94%. Apple Inc. represents a significant single stock holding at 15.21%. The portfolio lacks diversification across asset classes, which could increase risk during market downturns. Diversifying into bonds or alternative assets might mitigate risk and improve stability, especially during volatile periods.

Growth Info

The portfolio has demonstrated impressive historical performance with a CAGR of 27.17%, significantly outperforming many benchmarks. However, this high return comes at the cost of increased volatility, as evidenced by a maximum drawdown of -43.07%. This volatility suggests that while the portfolio can deliver substantial gains, it may also experience steep declines. Investors should be prepared for such fluctuations and consider whether they align with their risk tolerance and financial goals.

Projection Info

Using a Monte Carlo simulation, which models a range of potential future outcomes based on historical data, the portfolio shows a wide range of potential results. The median projection indicates a substantial growth of 1,412.6%, but with a 5th percentile outcome of -62.7%, underscoring the risk involved. While 895 out of 1,000 simulations resulted in positive returns, it's essential to remember that past performance and simulations do not guarantee future results. Investors should remain cautious and consider potential market changes.

Asset classes Info

  • Stocks
    100%

With a 100% allocation to stocks, the portfolio lacks diversification across asset classes, which can enhance stability and reduce risk. Adding asset classes such as bonds or real estate might offer more balanced returns and help cushion against market volatility. Diversification across asset classes is a fundamental strategy to manage risk and ensure more consistent performance over the long term.

Sectors Info

  • Technology
    67%
  • Consumer Discretionary
    6%
  • Telecommunications
    6%
  • Health Care
    5%
  • Financials
    5%
  • Consumer Staples
    3%
  • Industrials
    3%
  • Energy
    2%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, accounting for 67% of the allocation. This concentration could lead to higher volatility, especially during periods of tech sector downturns or interest rate hikes. Balancing the sector allocation by increasing exposure to other areas such as healthcare or consumer goods could provide more stability and reduce sector-specific risks.

Regions Info

  • North America
    99%

The portfolio's geographic allocation is almost entirely within North America, with 99% exposure. This limited geographic diversification increases vulnerability to regional economic downturns. Expanding exposure to international markets, particularly in Europe or Asia, could enhance diversification and provide access to growth opportunities in different economic environments.

Market capitalization Info

  • Mega-cap
    52%
  • Large-cap
    29%
  • Mid-cap
    18%

The portfolio's market capitalization allocation is skewed towards mega-cap stocks at 52%, followed by large caps at 29%. This focus on larger companies can provide stability but may limit growth potential. Including more mid-cap and small-cap stocks could offer higher growth opportunities and enhance diversification, balancing the risk-return profile.

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 potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting the current asset allocation, it might be possible to achieve a more efficient balance between risk and return. This optimization focuses on the current assets and does not necessarily imply a need for diversification into new asset classes.

Dividends Info

  • Apple Inc 0.50%
  • Micron Technology Inc 0.50%
  • Invesco QQQ Trust 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Vanguard S&P 500 ETF 1.00%
  • Weighted yield (per year) 0.61%

The portfolio's dividend yield is relatively low at 0.61%, with the Schwab U.S. Dividend Equity ETF providing the highest yield at 2.80%. For investors seeking income, increasing exposure to higher-yielding assets might be beneficial. However, focusing solely on dividends should not overshadow the importance of overall growth and risk management.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are low, with a total expense ratio (TER) of 0.05%, which supports better long-term performance. Low costs mean more of the investment returns are retained, enhancing compounding benefits over time. Maintaining this low-cost structure is advantageous, but it's also important to ensure that the portfolio is well-diversified and aligned with the investor's goals.

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