Highly concentrated tech-heavy portfolio with significant risk and limited geographic diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Aggressive Investors

This portfolio suits an aggressive investor with a high risk tolerance and a focus on long-term capital appreciation. The investor is likely to prioritize growth over income and is comfortable with significant volatility and drawdowns. Such an investor may have a longer investment horizon, allowing time to recover from potential market downturns. This strategy is ideal for those seeking substantial returns and willing to accept the associated risks.

Positions

  • NVIDIA Corporation
    NVDA - US67066G1040
    55.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    25.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    20.00%

This portfolio is heavily concentrated in NVIDIA Corporation, accounting for 55% of the total allocation, with the remaining investments in two ETFs. Such a concentration in a single stock raises the portfolio's risk profile significantly. Compared to typical benchmarks, this portfolio lacks diversification, which can lead to increased volatility. To mitigate this risk, consider diversifying across more stocks or ETFs to spread potential gains and losses across a broader range of assets.

Growth Info

Historically, the portfolio has achieved a remarkable CAGR of 43.88%, a testament to its aggressive growth focus. However, this comes with a high maximum drawdown of -52.39%, indicating substantial risk during downturns. While past performance is impressive, it doesn't guarantee future results. It's crucial to balance the pursuit of high returns with risk management. Consider strategies to protect against significant losses, such as diversifying or using hedging techniques.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a wide range of potential returns. With 1,000 simulations, the median return is projected at 4,592.04%, but there's a significant spread, reflecting the portfolio's volatility. While these projections offer insights, they are not guarantees. It's important to prepare for various scenarios, including those at the lower end of the spectrum, by maintaining a flexible investment strategy.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is almost entirely composed of stocks, with a negligible cash position. This lack of asset class diversification increases vulnerability to stock market fluctuations. Typically, a balanced portfolio includes a mix of stocks, bonds, and cash to reduce risk and stabilize returns. Consider adding other asset classes to improve resilience against market volatility, especially during periods of economic uncertainty.

Sectors

  • Technology
    70%
  • Consumer Discretionary
    6%
  • Telecommunications
    5%
  • Health Care
    4%
  • Financials
    4%
  • Consumer Staples
    4%
  • Industrials
    3%
  • Energy
    3%
  • Basic Materials
    1%
  • Utilities
    0%
  • Real Estate
    0%

With nearly 70% of the portfolio in technology, there's a significant sector concentration. While this has historically driven strong returns, it also means higher susceptibility to tech sector downturns. A more balanced sector allocation could reduce risk and enhance stability. Consider increasing exposure to underrepresented sectors to mitigate potential losses from sector-specific downturns.

Regions

  • North America
    99%
  • Europe Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%

The portfolio is heavily skewed towards North America, with minimal exposure to other regions. This geographic concentration limits the benefits of global diversification and exposes the portfolio to regional economic risks. Diversifying into international markets can provide opportunities for growth and reduce dependence on a single region's economic performance. Consider adding exposure to developed and emerging markets outside North America.

Dividends

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Weighted yield (per year) 0.87%

With a total dividend yield of 0.87%, the portfolio's income generation is modest, primarily driven by the Schwab U.S. Dividend Equity ETF. While dividends can provide a steady income stream, this portfolio's focus is clearly on capital appreciation. If income is a priority, consider increasing allocation to dividend-paying stocks or ETFs to enhance cash flow without sacrificing growth potential.

Ongoing product costs

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are relatively low, with a Total Expense Ratio (TER) of 0.05%, which is favorable for long-term performance. Low costs mean more of your returns are retained, compounding over time. This cost efficiency aligns well with best practices, supporting better net returns. Continue monitoring costs and explore opportunities to further reduce expenses without compromising on investment quality.

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.

While the portfolio is aggressive and growth-focused, it can potentially be optimized along the Efficient Frontier to achieve a better risk-return balance. The Efficient Frontier represents the optimal portfolios that offer the highest expected return for a defined level of risk. Consider reallocating assets within the existing holdings to enhance efficiency and maximize returns for the given risk level.

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