High-Risk Growth Portfolio with Heavy Technology Focus and Broad Geographic Diversification

Report created on Dec 2, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of common stock and ETFs, with a significant allocation to Taiwan Semiconductor Manufacturing at 44.25%. The remaining investments include Vanguard Total International Stock Index Fund ETF Shares, iShares U.S. Technology ETF, and Freedom 100 Emerging Markets ETF. This composition indicates a strong inclination towards growth-oriented investments, with a preference for technology and international exposure. The portfolio is diversified across multiple asset classes, albeit with a heavy skew towards stocks. This setup is suitable for investors seeking high growth potential but also exposes them to higher volatility.

Growth Info

Historically, the portfolio has performed impressively, boasting a compound annual growth rate (CAGR) of 24.86%. However, it has also experienced significant volatility, with a maximum drawdown of -46.97%. This performance suggests that while the portfolio can generate substantial returns, it also poses considerable risk during market downturns. Investors should be prepared for such fluctuations and consider their risk tolerance. To improve resilience, it may be beneficial to incorporate assets that provide stability during turbulent market periods, potentially reducing the impact of drawdowns.

Projection Info

A Monte Carlo simulation was conducted with 1,000 simulations to project future performance. Assuming a hypothetical initial investment, the simulations revealed a wide range of potential outcomes. The 5th percentile projected a 126.7% return, while the 50th and 67th percentiles showed impressive returns of 1,142.59% and 1,853.58%, respectively. With 994 simulations yielding positive returns, the portfolio demonstrates a strong potential for growth. However, the inherent uncertainty in projections underscores the importance of maintaining a diversified portfolio to mitigate risks and capitalize on potential opportunities.

Asset classes Info

  • Stocks
    100%

This portfolio is heavily weighted towards stocks, comprising 99.55% of the total allocation. The remaining allocation is distributed among cash, other assets, and a negligible amount in unclassified assets. The dominance of stocks suggests a high-risk, high-reward approach, suitable for investors with a long-term horizon and a strong risk appetite. To enhance diversification and potentially reduce risk, investors could consider incorporating other asset classes, such as bonds or real estate, to balance the portfolio and provide a buffer during market downturns.

Sectors Info

  • Technology
    66%
  • Financials
    9%
  • Industrials
    5%
  • Consumer Discretionary
    4%
  • Telecommunications
    4%
  • Basic Materials
    4%
  • Health Care
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is significantly concentrated in the technology sector, which accounts for 66.03% of the total allocation. Other sectors, such as financial services, industrials, and consumer cyclicals, have much smaller allocations. This heavy concentration in technology indicates a high growth potential but also exposes the portfolio to sector-specific risks. To mitigate these risks, investors could consider diversifying across more sectors, reducing reliance on technology, and enhancing overall portfolio resilience. This approach could lead to more stable returns over the long term.

Regions Info

  • Asia Emerging
    50%
  • North America
    17%
  • Europe Developed
    10%
  • Asia Developed
    9%
  • Japan
    4%
  • Latin America
    4%
  • Europe Emerging
    2%
  • Africa/Middle East
    2%
  • Australasia
    1%

Geographically, the portfolio is diversified across various regions, with a substantial allocation to Asia Emerging at 50.19%. North America, Europe Developed, and Asia Developed also hold significant portions. This geographic diversification provides exposure to different economic environments and growth opportunities. However, the heavy focus on emerging markets may introduce additional volatility. To balance this, investors could consider increasing allocations to more stable regions, potentially reducing overall risk while maintaining growth potential.

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 optimization chart suggests that there is room for improvement in balancing risk and return. By moving along the efficient frontier, investors can achieve a more risk-adjusted portfolio. To pursue a riskier portfolio, consider increasing exposure to high-growth sectors or regions. For a more conservative approach, incorporating bonds or stable assets can reduce volatility. Before making adjustments, it's crucial to align changes with personal financial goals and risk tolerance. Optimizing the portfolio requires a thoughtful strategy and regular review to ensure alignment with objectives.

Dividends Info

  • Freedom 100 Emerging Markets ETF 2.60%
  • iShares U.S. Technology ETF 0.40%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.71%

The portfolio offers a modest total dividend yield of 1.71%, with contributions from various holdings. The Vanguard Total International Stock Index Fund ETF Shares provides the highest yield at 3.0%, while other holdings like the Freedom 100 Emerging Markets ETF and Taiwan Semiconductor Manufacturing also contribute. This yield can provide some income, but the portfolio's primary focus remains on growth. Investors seeking higher income may consider rebalancing to include higher-yielding assets, though this could impact the portfolio's growth potential.

Ongoing product costs Info

  • Freedom 100 Emerging Markets ETF 0.49%
  • iShares U.S. Technology ETF 0.40%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is relatively low at 0.15%, with individual costs ranging from 0.08% to 0.49% for different ETFs. This cost structure is advantageous for long-term investors, as lower fees can significantly enhance net returns over time. Maintaining low costs is crucial for maximizing investment growth, so investors should continue to monitor and manage expenses. Incorporating cost-efficient investments can further optimize the portfolio's performance and contribute to achieving financial goals.

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