An aggressive tech-focused portfolio with high growth potential and significant concentration risk

Report created on Jan 26, 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 significant 35.83% allocation to SAP SE, indicating a high concentration risk. It consists of 98% stocks and a minimal 2% in bonds, showcasing an aggressive stance. Compared to typical balanced portfolios, this one is more concentrated and risk-oriented. This composition can lead to higher volatility, especially during market downturns. To mitigate concentration risk, consider diversifying across more asset classes and reducing the weight of dominant holdings. This can help in achieving a more balanced risk-return profile, aligning better with broader market benchmarks.

Growth Info

Historically, the portfolio has delivered a remarkable compound annual growth rate (CAGR) of 45.50%, significantly outperforming typical market benchmarks. However, it has also experienced a maximum drawdown of -21.44%, indicating substantial volatility. While past performance is impressive, it's crucial to remember that it doesn't guarantee future results. The high returns come with increased risk, as evidenced by the drawdown. To maintain high performance while managing risk, consider periodically rebalancing the portfolio to lock in gains and reduce exposure to overvalued assets.

Projection Info

Monte Carlo simulations, which use historical data to project potential outcomes, indicate a wide range of future returns for this portfolio. The 5th percentile suggests a potential loss of -65.6%, while the median simulation projects an 842.6% increase. Though 866 out of 1,000 simulations show positive returns, the variability underscores the inherent risk. These projections highlight the uncertainty of future performance, emphasizing the need for risk management strategies. Regularly reviewing and adjusting allocations can help navigate potential market changes and align the portfolio with evolving investment goals.

Asset classes Info

  • Stocks
    98%
  • Bonds
    2%

The portfolio's asset allocation is skewed towards stocks (98%), with minimal exposure to bonds (2%). This heavy reliance on equities reflects an aggressive investment strategy, prioritizing growth over income or stability. Compared to balanced portfolios that typically include more bonds for stability, this allocation may lead to higher volatility. To improve diversification and reduce risk, consider increasing the allocation to bonds or other asset classes. This can provide a cushion during market downturns and contribute to a more stable long-term growth trajectory.

Sectors Info

  • Technology
    73%
  • Consumer Discretionary
    11%
  • Telecommunications
    4%
  • Financials
    4%
  • Health Care
    3%
  • Industrials
    3%

With 73% of the portfolio in technology, there's a notable sector concentration that could lead to increased volatility, especially during tech market corrections. The rest is spread across consumer cyclicals, communication services, financial services, healthcare, and industrials. While tech has driven significant growth, it's important to consider the potential impact of sector-specific risks. To enhance sector diversification, consider reallocating some tech holdings to other sectors with growth potential. This can help mitigate sector-specific risks and improve the portfolio's resilience against market fluctuations.

Regions Info

  • North America
    56%
  • Europe Developed
    38%
  • No data
    3%
  • Asia Developed
    1%

The portfolio's geographic exposure is concentrated in North America (56%) and Europe Developed (38%), with minimal allocation to Asia Developed and other regions. This focus on developed markets can provide stability but limits exposure to emerging markets, which may offer higher growth potential. Compared to global benchmarks, the portfolio is underexposed to Asia and other emerging regions. Consider diversifying geographically by including more assets from underrepresented regions. This can enhance the portfolio's growth prospects and reduce dependence on the economic performance of a few regions.

Market capitalization Info

  • Mega-cap
    60%
  • Large-cap
    31%
  • Mid-cap
    8%

The portfolio is dominated by mega-cap stocks (60%), followed by big-cap (31%) and medium-cap (8%) stocks. This skew towards larger companies offers stability but may limit growth potential compared to smaller, more dynamic firms. While mega-cap stocks are generally less volatile, they might not capture the same growth opportunities as smaller companies. To balance stability with growth, consider increasing exposure to small-cap stocks. This can provide access to emerging companies with high growth potential, enhancing overall returns while maintaining a diversified market cap exposure.

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 identifies the best possible allocation of current assets. The optimal portfolio suggests an expected return of 65.09% with a risk level of 24.67%, compared to the current setup. This optimization focuses on reallocating existing assets rather than adding new ones, aiming for the best risk-adjusted returns. Consider adjusting allocations to align with the Efficient Frontier, potentially enhancing performance without increasing risk. Regular reviews can ensure the portfolio remains efficient as market conditions evolve.

Dividends Info

  • Apple Inc 0.40%
  • Crown Castle 7.10%
  • Salesforce.com Inc 0.50%
  • Walt Disney Company 0.80%
  • EMCOR Group Inc 0.10%
  • Alphabet Inc Class A 0.30%
  • Kinsale Capital Group Inc 0.10%
  • Microsoft Corporation 0.70%
  • Micron Technology Inc 0.40%
  • ClearShares Piton Intermediate Fixed Income ETF 1.60%
  • Qualcomm Incorporated 1.90%
  • SAP SE 0.90%
  • Teradyne Inc 0.40%
  • Walker & Dunlop Inc 2.70%
  • Weighted yield (per year) 0.39%

The portfolio's overall dividend yield is low at 0.39%, reflecting its focus on growth rather than income. While some holdings like Crown Castle offer higher yields (7.10%), most are low or non-dividend-paying stocks. For investors seeking income, this portfolio might not meet expectations. If generating income is a priority, consider reallocating some assets to higher-yielding stocks or dividend-focused funds. This can provide a steady income stream, complementing the growth potential of the existing holdings and aligning the portfolio with income-oriented investment goals.

Ongoing product costs Info

  • ClearShares Piton Intermediate Fixed Income ETF 0.45%
  • Weighted costs total (per year) 0.01%

The portfolio's costs are relatively low, with the ClearShares Piton Intermediate Fixed Income ETF's total expense ratio (TER) at 0.45% and an overall TER of 0.01%. Keeping costs low is beneficial for long-term returns, as fees can erode gains over time. Compared to industry standards, these costs are commendably low, supporting better net performance. To maintain this advantage, regularly review and compare fund fees to ensure they remain competitive. Consider replacing high-cost funds with similar, lower-cost alternatives to further enhance net returns.

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