Growth-Oriented Portfolio with Moderate Diversification and High Risk Suitable for Aggressive Investors

Report created on Dec 5, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of four ETFs with a significant allocation to industrials and technology sectors. The largest holding is the First Trust RBA American Industrial RenaissanceTM ETF, making up 31.8% of the portfolio, followed closely by the Invesco QQQ Trust at 30.15%. The iShares MSCI India Small-Cap ETF holds 29.43%, while the Fidelity® MSCI Information Technology Index ETF rounds out the portfolio with 8.62%. This composition indicates a focus on growth sectors, with a moderate level of diversification. To enhance diversification, consider including other asset classes or sectors.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 17.57%. However, it experienced a maximum drawdown of -35.56%, indicating significant volatility. This performance suggests that while the portfolio has the potential for high returns, it also carries substantial risk. Investors should be prepared for potential fluctuations in value. To mitigate this risk, consider diversifying further to smooth out returns and reduce the impact of market downturns on the portfolio's value.

Projection Info

A Monte Carlo simulation was conducted with 1,000 simulations to project future performance. This simulation provides a range of possible outcomes based on historical data. The median outcome suggests a potential increase of 839.65% in portfolio value, with a 5th percentile outcome of 135.41% and a 67th percentile outcome of 1,307.37%. The annualized return across all simulations was 20.16%. While these projections are positive, they are based on assumptions and should not be solely relied upon for decision-making. Consider using these projections as a guide to assess potential future performance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.76% of the allocation in this asset class. A small percentage is in cash, providing minimal liquidity. This allocation suggests an aggressive growth strategy with a high-risk tolerance. For investors seeking to balance risk and return, consider incorporating other asset classes, such as bonds, to provide stability and reduce overall portfolio volatility. A more balanced asset allocation can help protect the portfolio in periods of market instability.

Sectors Info

  • Industrials
    37%
  • Technology
    27%
  • Consumer Discretionary
    8%
  • Financials
    8%
  • Telecommunications
    6%
  • Health Care
    5%
  • Basic Materials
    4%
  • Consumer Staples
    3%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is concentrated, with industrials and technology making up over 63% of the portfolio. This concentration indicates a bet on these sectors' future performance. While this can lead to substantial gains if these sectors perform well, it also exposes the portfolio to sector-specific risks. To mitigate this risk, consider diversifying into other sectors that may offer growth potential and reduce reliance on industrials and technology. A well-diversified sector allocation can enhance portfolio resilience.

Regions Info

  • North America
    70%
  • Asia Emerging
    30%

The portfolio's geographic allocation is primarily focused on North America, with 69.77% exposure, and significant exposure to Asia Emerging at 29.5%. This indicates a preference for developed markets with some exposure to emerging markets' growth potential. While this provides a good balance between stability and growth, consider diversifying further into other regions to capture global opportunities and reduce geographic risk. A broader geographic allocation can help hedge against region-specific economic downturns.

Redundant positions Info

  • Invesco QQQ Trust
    Fidelity® MSCI Information Technology Index ETF
    High correlation

The portfolio includes highly correlated assets, particularly between the Invesco QQQ Trust and the Fidelity® MSCI Information Technology Index ETF. This correlation suggests overlapping exposure, which may not provide diversification benefits. Highly correlated assets tend to move in the same direction, potentially amplifying risk. To improve diversification, consider reducing exposure to correlated assets and seeking investments with low correlation to existing holdings. This can help create a more balanced and resilient 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.

Before optimizing the portfolio, addressing the high correlation between certain assets is essential. Removing or reducing exposure to overlapping investments can enhance diversification benefits. Once this is achieved, consider moving along the efficient frontier to adjust the risk-return profile. Increasing exposure to less volatile asset classes can make the portfolio more conservative, while embracing higher-risk assets can enhance potential returns. Focus on aligning the portfolio with personal risk tolerance and financial goals for optimal performance.

Dividends Info

  • First Trust RBA American Industrial RenaissanceTM ETF 0.20%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Invesco QQQ Trust 0.60%
  • iShares MSCI India Small-Cap ETF 0.30%
  • Weighted yield (per year) 0.38%

The portfolio's dividend yield is relatively low at 0.38%, indicating a focus on capital appreciation rather than income generation. This may suit investors seeking growth over immediate income. However, for those looking to generate income, consider incorporating higher-yielding investments to boost overall portfolio yield. Balancing growth and income can provide a more stable return profile, catering to different financial goals and needs. A diversified approach to income generation can enhance long-term portfolio performance.

Ongoing product costs Info

  • First Trust RBA American Industrial RenaissanceTM ETF 0.70%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Invesco QQQ Trust 0.20%
  • iShares MSCI India Small-Cap ETF 0.79%
  • Weighted costs total (per year) 0.52%

The total expense ratio (TER) for the portfolio is 0.52%, which is reasonable for an ETF-based portfolio. The costliest holding is the iShares MSCI India Small-Cap ETF at 0.79%, while the Fidelity® MSCI Information Technology Index ETF is the cheapest at 0.08%. Keeping costs low is crucial for maximizing returns over time. Regularly review the expense ratios of holdings and consider replacing high-cost funds with lower-cost alternatives that offer similar exposure. Cost-efficient investing can significantly enhance long-term portfolio performance.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey