A tech-centric portfolio with heavy concentration in the US market and limited diversification

Report created on Feb 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is primarily invested in the SPDR S&P 500 ETF Trust, making up over 60% of the holdings. The rest is largely concentrated in tech stocks like Microsoft and NVIDIA, with a small allocation to the Defiance Quantum ETF. This composition suggests a focus on growth, particularly in the technology sector. While the heavy weight in the S&P 500 provides broad market exposure, the individual stock positions increase concentration risk. Consider evaluating whether this aligns with your risk tolerance and goals, potentially rebalancing to include a more diverse range of asset classes to mitigate risk.

Growth Info

Historically, this portfolio has performed impressively, with a Compound Annual Growth Rate (CAGR) of 23.89%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -37.24%. This reflects the high-risk, high-reward nature of the portfolio's tech-heavy focus. Comparing this to a benchmark like the S&P 500, which has a lower typical drawdown, highlights the risk involved. While past performance is no guarantee of future results, understanding these metrics can help in assessing if the potential volatility aligns with your investment strategy.

Projection Info

Using Monte Carlo simulations, which project potential future outcomes based on historical data, the portfolio shows promising forward projections. With a median expected return of 3,849% and 999 out of 1,000 simulations yielding positive returns, the outlook appears optimistic. However, remember that these simulations are based on past data and assumptions, which may not fully capture future market conditions. It's crucial to regularly review and adjust your strategy to ensure it remains aligned with your goals, especially as market dynamics evolve.

Asset classes Info

  • Stocks
    100%

Currently, the portfolio is 100% invested in stocks, which limits diversification and exposes it to equity market volatility. In comparison, balanced benchmarks typically include a mix of asset classes like bonds or real estate to buffer against market swings. While this all-equity approach can offer higher returns during bull markets, it also increases risk during downturns. Consider diversifying into other asset classes to create a more balanced risk-return profile, potentially reducing overall portfolio volatility and enhancing long-term stability.

Sectors Info

  • Technology
    58%
  • Financials
    8%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Telecommunications
    6%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in the technology sector, accounting for 58% of the holdings. Other sectors like financial services and consumer cyclicals have minimal representation. This tech-centric focus can lead to higher volatility, especially during periods of regulatory changes or economic shifts affecting tech companies. While this concentration can drive growth during tech booms, it also increases risk. Diversifying across more sectors can provide a buffer against sector-specific downturns and contribute to a more stable performance.

Regions Info

  • North America
    97%
  • Europe Developed
    1%
  • Japan
    1%

With 97% of the portfolio's geographic exposure in North America, there's a significant concentration risk. This reliance on a single region limits diversification and could lead to underperformance if the U.S. market faces a downturn. Benchmarks often have a more balanced global distribution, incorporating emerging markets and other developed regions. Consider increasing international exposure to benefit from global growth opportunities and reduce reliance on the U.S. market, potentially enhancing long-term returns.

Market capitalization Info

  • Mega-cap
    63%
  • Large-cap
    24%
  • Mid-cap
    12%
  • Small-cap
    1%

The portfolio is dominated by mega-cap stocks, comprising 63% of the holdings, with minimal exposure to small and micro-cap stocks. This focus on large companies generally offers stability and lower volatility but may limit growth potential compared to smaller, more agile companies. Balancing the portfolio with a mix of market capitalizations can enhance diversification, providing the opportunity for higher returns from smaller-cap stocks while maintaining the stability of larger-cap holdings.

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 can potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio given the current assets. This involves adjusting allocations to achieve the highest expected return for a given level of risk. While the current tech-heavy focus may offer high returns, balancing it with other asset classes could improve the portfolio's efficiency. Exploring different allocation strategies can help maximize returns while managing risk, ensuring alignment with your investment objectives.

Dividends Info

  • Microsoft Corporation 0.70%
  • Defiance Quantum 0.60%
  • SPDR S&P 500 ETF Trust 1.20%
  • Weighted yield (per year) 0.90%

The portfolio offers a moderate dividend yield of 0.90%, primarily driven by the SPDR S&P 500 ETF Trust. While dividends provide a steady income stream, this yield is relatively low compared to more income-focused portfolios. For growth-oriented investors, dividends may be less of a priority, but it's worth considering if increasing dividend income aligns with your financial goals. Reinvesting dividends can also enhance compounding returns over time, contributing to long-term wealth accumulation.

Ongoing product costs Info

  • Defiance Quantum 0.40%
  • SPDR S&P 500 ETF Trust 0.10%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is 0.09%, which is impressively low and supports better long-term performance by minimizing costs. This is particularly advantageous in a growth-focused portfolio, where every percentage saved on costs can significantly impact returns over time. Maintaining low costs is a positive aspect, but it's essential to regularly review the expense ratios of individual holdings to ensure they remain competitive and align with your investment strategy.

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