A growth-oriented portfolio with high concentration in consumer defensive and technology stocks

Report created on Dec 7, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily concentrated in common stocks, with Costco Wholesale Corp making up over half of the total allocation. The rest is spread across five other companies, primarily in the technology and industrial sectors. This lack of diversification could expose the portfolio to significant volatility. A more balanced allocation across a broader range of assets could reduce risk and improve stability. Consider diversifying into bonds or other asset classes to balance the high equity exposure.

Growth Info

Historically, the portfolio has shown strong performance with a compound annual growth rate (CAGR) of 20.5%. However, this has come with a significant maximum drawdown of -25.76%, indicating periods of substantial loss. While past performance can offer insights, it's not a guarantee of future results. The high growth rate suggests potential for substantial gains, but the drawdown highlights the need for risk management strategies, such as stop-loss orders or gradual rebalancing.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes for the portfolio, with a median expected return of 646.59%. This method uses historical data to estimate future performance, but it's important to remember that it cannot predict specific future events. While the simulations show a high likelihood of positive returns, the variability highlights the importance of preparing for different scenarios. Regularly reviewing and adjusting the portfolio can help manage potential risks.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking diversification across asset classes. This concentration limits the ability to mitigate risk through different asset types, such as bonds or real estate. Having a mix of asset classes can provide a buffer against market volatility and economic downturns. Consider incorporating other asset classes to achieve a more balanced risk-return profile.

Sectors Info

  • Consumer Staples
    51%
  • Technology
    24%
  • Industrials
    18%
  • Consumer Discretionary
    5%
  • Telecommunications
    2%

The portfolio is heavily weighted towards the consumer defensive and technology sectors, which together make up nearly 75% of the total allocation. This sector concentration can lead to increased risk if these industries face downturns. Diversifying into other sectors, such as healthcare or financials, could help spread risk and capture opportunities in different economic environments.

Regions Info

  • North America
    95%
  • Asia Emerging
    5%

With 94.57% of the portfolio's assets located in North America, there's limited geographic diversification. This focus increases vulnerability to regional economic issues. Including more international stocks could provide exposure to different economic cycles and growth opportunities. Consider balancing the geographic allocation to reduce dependency on a single region.

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 could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. This doesn't necessarily mean adding new assets but rather adjusting current allocations for better efficiency. By reallocating assets within the portfolio, you can potentially achieve higher returns for the same level of risk, or reduce risk while maintaining returns.

Dividends Info

  • Apple Inc 0.40%
  • Alibaba Group Holding Ltd 1.90%
  • Costco Wholesale Corp 2.00%
  • Alphabet Inc Class C 0.20%
  • Southwest Airlines Company 2.10%
  • Microsoft Corporation 0.50%
  • Weighted yield (per year) 1.62%

The portfolio's dividend yield is relatively low at 1.62%, with most stocks offering minimal dividends. While growth stocks often reinvest earnings for expansion, dividend-paying stocks can provide a steady income stream. Consider adding higher-yielding stocks to balance growth with income, enhancing total returns and providing cash flow during volatile periods.

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