High-Risk Single-Focused Portfolio with Strong Tech Bias and Limited Diversification Potential

Report created on Jul 12, 2024

Risk profile Info

7/7
Speculative
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Diversification profile Info

1/5
Single-Focused
← Less diversification More diversification →

Positions

The portfolio is heavily skewed towards a high-risk investment strategy, with 80% allocated to ProShares UltraPro QQQ, an ETF known for its aggressive approach. The remaining 20% is split evenly between Direxion Daily 20+ Year Treasury Bull 3X Shares and ProShares Ultra Semiconductors, both of which are leveraged ETFs. This composition reflects a speculative profile with a focus on technology and semiconductors. While such a strategy can yield high returns, it also exposes the portfolio to significant volatility and potential losses.

Growth Info

Historically, the portfolio has exhibited impressive performance with a CAGR of 46.03%. However, this comes with a downside, as evidenced by a maximum drawdown of -80.68%, indicating substantial risk. The portfolio's returns are concentrated in a few days, with 90% of returns generated in just 36 days. This highlights the speculative nature of the investments, which can result in large swings in value. Investors should be prepared for potential periods of significant underperformance, despite the high average returns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential outcomes. The median projection suggests a substantial return of 1,182.75%, but the 5th percentile indicates a possible loss of -71.68%. The annualized return of all simulations is 40.15%, suggesting high potential returns but with considerable risk. This simulation underscores the portfolio's speculative nature and the importance of aligning it with one's risk tolerance and investment goals.

Asset classes Info

  • Stocks
    58%
  • Cash
    30%
  • Bonds
    10%
  • Other
    2%

The portfolio is primarily composed of stocks, making up 58.39% of the allocation. Cash constitutes 30.43%, while bonds and other assets make up the rest. This asset class distribution suggests a high-risk appetite, as the majority of the portfolio is invested in equities, which are inherently more volatile. Investors seeking to reduce risk might consider diversifying into more stable asset classes, such as bonds or cash, to balance the portfolio and reduce potential volatility.

Sectors Info

  • Technology
    51%
  • Telecommunications
    13%
  • Consumer Discretionary
    11%
  • Consumer Staples
    5%
  • Health Care
    4%
  • Industrials
    3%
  • Basic Materials
    1%
  • Utilities
    1%

The sector allocation is heavily weighted towards technology, accounting for 50.85% of the portfolio. Other notable sectors include communication services and consumer cyclicals. This concentration in a few sectors increases the portfolio's risk, as it is more susceptible to sector-specific downturns. To mitigate this risk, investors should consider diversifying across a broader range of sectors. This can help stabilize returns and reduce the impact of any single sector's poor performance on the overall portfolio.

Regions Info

  • North America
    88%
  • Europe Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 87.96% of assets allocated in this region. The remaining exposure is minimal, with small allocations in Europe, Latin America, and Asia. This geographic concentration increases vulnerability to regional economic downturns. Investors may want to consider diversifying geographically to spread risk and take advantage of growth opportunities in other regions. A more balanced geographic distribution can enhance the portfolio's resilience to localized economic challenges.

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 current portfolio is efficient, lying close to the efficient frontier, meaning it offers a good balance of risk and return given the chosen assets. However, it is not optimal, as there is a portfolio with a higher expected return of 57.68% and a lower risk level of 64.10%. To optimize, investors could explore adjusting the asset allocation to align better with their risk preferences. Understanding the efficient frontier can help in making informed decisions about potential adjustments, ensuring the portfolio is aligned with personal financial goals and risk tolerance.

Dividends Info

  • Direxion Daily 20+ Year Treasury Bull 3X Shares 3.80%
  • ProShares UltraPro QQQ 1.20%
  • Weighted yield (per year) 1.34%

The portfolio's dividend yield is relatively low at 1.34%, with the Direxion Daily 20+ Year Treasury Bull 3X Shares contributing the highest yield of 3.8%. The ProShares UltraPro QQQ offers a modest yield of 1.2%. This indicates that the portfolio is not focused on generating income through dividends, but rather on capital appreciation. Investors seeking regular income may want to adjust their strategy to include higher-yielding assets, which can provide a steady stream of income and help balance the portfolio's risk profile.

Ongoing product costs Info

  • Direxion Daily 20+ Year Treasury Bull 3X Shares 1.04%
  • ProShares UltraPro QQQ 0.88%
  • ProShares Ultra Semiconductors 0.95%
  • Weighted costs total (per year) 0.90%

The portfolio's total expense ratio (TER) is 0.9%, with individual ETFs ranging from 0.88% to 1.04%. While these costs are relatively moderate, they can still impact overall returns, especially in a high-risk portfolio where every percentage point counts. Investors should be mindful of these costs and consider options to minimize them, such as exploring lower-cost ETFs or funds. Keeping costs low is crucial for maximizing net returns, particularly in a speculative portfolio where the potential for high returns is offset by significant risk.

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