A highly speculative portfolio with strong tech focus and limited diversification

Report created on Dec 20, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily concentrated in technology, with 50% allocated to MicroStrategy and a significant portion in tech-focused ETFs. This composition indicates a high-risk, high-reward strategy, deviating from typical balanced benchmarks. A more diversified portfolio might include a broader range of sectors and asset types to reduce risk. Consider reallocating some assets to underrepresented areas, such as bonds or international equities, to enhance stability and long-term growth potential.

Growth Info

Historically, the portfolio has shown impressive returns, with a CAGR of 48.36%. However, this comes with substantial volatility, as indicated by a max drawdown of -68.29%. Such performance suggests that while the portfolio can achieve high returns, it also risks significant losses. Comparing these figures to a benchmark like the S&P 500, which typically has lower volatility, highlights the aggressive nature of this strategy. Consider incorporating more stable, lower-risk assets to mitigate potential downturns.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, from a 5th percentile loss of -97.82% to a 67th percentile gain of 112.58%. These projections, based on historical data, indicate high uncertainty and risk. While the median projection suggests a loss, the potential for gains remains significant. Remember, these simulations are hypothetical and not predictive. To balance risk, consider adjusting the asset mix to include more stable investments that may offer more predictable returns.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio is predominantly composed of stocks (94.94%), with minimal exposure to bonds (4.92%). This heavy stock allocation suggests potential for high growth but also increased volatility. A typical balanced portfolio might have a more even split between stocks and bonds. To enhance diversification and reduce risk, consider increasing the bond allocation or introducing other asset classes such as real estate or commodities.

Sectors Info

  • Technology
    70%
  • Financials
    12%
  • Consumer Discretionary
    7%
  • Telecommunications
    2%
  • Health Care
    1%
  • Industrials
    1%
  • Consumer Staples
    1%

With 70.17% of the portfolio in technology, there is a strong sector concentration. This focus can lead to higher volatility, especially if tech experiences downturns, such as during interest rate hikes. Compared to benchmarks that often have more balanced sector allocations, this portfolio is more susceptible to sector-specific risks. Diversifying into sectors like healthcare or consumer staples could reduce this risk and provide more stability.

Regions Info

  • North America
    92%
  • Europe Developed
    1%
  • Asia Emerging
    1%
  • Australasia
    1%
  • Asia Developed
    1%

The portfolio is heavily weighted towards North America (91.59%), with minimal exposure to other regions. This geographic concentration increases vulnerability to regional economic downturns or policy changes. A more globally diversified portfolio might include greater exposure to emerging markets or developed regions outside North America. This can help mitigate regional risks and capture growth opportunities worldwide.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard S&P 500 ETF, Invesco NASDAQ 100 ETF, and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move in the same direction, limiting diversification benefits. In a market downturn, these correlations can amplify losses. Consider replacing some of these overlapping assets with those that have lower correlations to improve risk management and portfolio resilience.

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.

Optimizing the portfolio using the Efficient Frontier could potentially improve the risk-return ratio. This involves adjusting the current asset allocation to achieve the best possible return for a given level of risk. However, this optimization focuses on the existing assets, and diversification or other investment goals should also be considered. Maintaining a balance between risk and return is key to achieving long-term investment success.

Dividends Info

  • Global X Blockchain ETF 1.70%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • iShares Semiconductor ETF 0.50%
  • Vanguard S&P 500 ETF 0.90%
  • Weighted yield (per year) 0.58%

The portfolio's dividend yield is relatively low at 0.58%, reflecting its growth-focused strategy. Dividends can provide a steady income stream and help cushion against market volatility. For investors seeking income, increasing exposure to higher-yielding assets, such as dividend-focused ETFs or bonds, could enhance returns. Balancing growth and income can provide a more stable return profile over time.

Ongoing product costs Info

  • Global X Blockchain ETF 0.50%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • iShares Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's overall TER (Total Expense Ratio) is 0.12%, which is relatively low and advantageous for long-term performance. Minimizing costs is crucial, as high fees can erode returns over time. Ensuring that each investment justifies its cost is important. Regularly reviewing and potentially replacing high-cost assets with more cost-effective alternatives can further enhance net returns.

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