A tech-focused portfolio with high growth potential but limited geographic diversification
Report created on Apr 3, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
CS iShares Core S&P 500 UCITS ETF USD (Acc)
CSPX - IE00B5BMR087 50.00% -
CN iShares NASDAQ 100 UCITS ETF USD (Acc)
CNX1 - IE00B53SZB19 40.00% -
SM VanEck Semiconductor UCITS ETF
SMGB - IE00BMC38736 10.00%
The portfolio is heavily concentrated in equities, with 100% allocation to stocks. This focus on equities aligns with a growth-oriented strategy, but it lacks diversification across asset classes like bonds or cash, which could help mitigate risk. Compared to a balanced benchmark, this portfolio is skewed towards equities, increasing potential returns but also volatility. To enhance stability, consider adding fixed income or alternative assets, which can provide a buffer during market downturns.
Growth
Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 12.76%, indicating strong growth. This performance is impressive, especially when compared to typical equity benchmarks, but it's important to note the portfolio's maximum drawdown of -16.20%. This suggests that while returns are high, the portfolio can experience significant volatility. To manage this risk, consider strategies like rebalancing or diversifying into less correlated assets to smooth out potential downturns.
Projection
The Monte Carlo simulation, which uses historical data to project future outcomes, estimates an annualized return of 12.68% with a high probability of positive returns. However, it's essential to remember that these projections are based on past performance and don't guarantee future results. The simulation suggests a wide range of potential outcomes, emphasizing the need for a diversified approach to manage uncertainty. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions.
Asset classes
- Stocks 100%
The portfolio is solely invested in stocks, with no exposure to other asset classes. This lack of diversification can increase risk, as equities tend to be more volatile than bonds or real estate. A more balanced allocation could provide stability and reduce overall risk. Consider introducing bonds or other asset classes to create a more diversified and resilient portfolio, which can help cushion against market fluctuations and provide a steadier return profile.
Sectors
- Technology 46%
- Telecommunications 11%
- Consumer Discretionary 11%
- Health Care 8%
- Financials 7%
- Consumer Staples 5%
- Industrials 5%
- Energy 2%
- Utilities 2%
- Basic Materials 2%
- Real Estate 1%
The portfolio is heavily weighted towards the technology sector, comprising 46% of the total allocation. While this concentration has driven strong past performance, it also increases susceptibility to sector-specific risks, such as regulatory changes or tech market volatility. Balancing the sector allocation by increasing exposure to underrepresented areas like healthcare or consumer staples could mitigate these risks and provide a more stable performance across different market cycles.
Regions
- North America 96%
- Europe Developed 2%
- Asia Developed 1%
Geographically, the portfolio is predominantly focused on North America, with 96% allocation. This concentration limits exposure to international markets, potentially missing out on growth opportunities in regions like Asia or Europe. Diversifying geographically can reduce risk and enhance returns by capturing growth in various economies. Consider increasing exposure to emerging markets or developed regions outside North America to achieve a more balanced global allocation and reduce reliance on a single economic region.
Market capitalization
- Mega-cap 48%
- Large-cap 37%
- Mid-cap 15%
The portfolio is primarily invested in large-cap stocks, with 85% in mega and big companies. This focus provides stability and lower volatility compared to smaller companies, but it may limit growth potential. Including mid-cap or small-cap stocks could enhance diversification and capture higher growth opportunities. A balanced approach across different market capitalizations can offer a mix of stability and growth, improving the overall risk-return profile of the portfolio.
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 for a better risk-return ratio using the Efficient Frontier, which suggests a potential return of 15.72%. This optimization involves reallocating existing assets to achieve the best possible risk-return balance without increasing overall risk. Consider reviewing the current allocation and making adjustments to enhance efficiency, focusing on achieving the highest return for the given level of risk, while maintaining alignment with investment goals.
Ongoing product costs
- iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
- iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
- VanEck Semiconductor UCITS ETF 0.35%
- Weighted costs total (per year) 0.24%
The total expense ratio (TER) of 0.24% is relatively low, supporting better long-term returns by minimizing costs. This efficient cost structure aligns with best practices for maintaining a cost-effective investment strategy. Keeping expenses low is crucial, as high costs can erode returns over time. Continue to monitor and manage expenses, ensuring they remain competitive and aligned with the portfolio's objectives to support optimal performance.
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