Aggressive growth portfolio with a strong focus on technology and large-cap U.S. equities

Report created on Feb 1, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily skewed towards equity ETFs, with a significant 44.33% allocation to the Vanguard S&P 500 ETF. This composition reflects a concentrated focus on U.S. large-cap stocks, particularly in the technology sector. While this aligns with aggressive growth strategies, it may limit diversification. The inclusion of ProShares UltraPro QQQ and Invesco QQQ Trust adds further tech exposure, amplifying potential returns but also increasing risk. To enhance diversification, consider adding more varied asset classes, such as fixed income or international equities, to balance out the U.S. focus and sector concentration.

Growth Info

Historically, this portfolio has delivered impressive returns, with a CAGR of 20.89%. However, it's important to note the significant volatility, as evidenced by a max drawdown of -44.55%. Such performance indicates a high-risk, high-reward scenario typical of aggressive portfolios. While past performance can provide insights, it doesn't guarantee future results. Consider evaluating whether this level of volatility aligns with your risk tolerance. Diversifying into less volatile assets could mitigate potential drawdowns, offering a more stable return profile over time.

Projection Info

Using Monte Carlo simulations, the portfolio shows a wide range of potential outcomes, with a median projected growth of 670.1%. These simulations use historical data to estimate future performance, but remember, they are not predictions. The high number of simulations with positive returns (950 out of 1,000) suggests a strong potential upside, yet the possibility of zero or negative returns remains. Regularly reviewing and adjusting the portfolio in response to market changes can help manage risks and optimize returns.

Asset classes Info

  • Stocks
    95%
  • Cash
    5%

The portfolio is overwhelmingly dominated by stocks, comprising 95% of the total allocation. While this is consistent with an aggressive growth strategy, it leaves little room for risk mitigation through asset class diversification. Including fixed income or alternative investments could provide a buffer against equity market volatility. Balancing the asset classes can enhance the portfolio's resilience during market downturns and potentially improve the risk-return profile.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Health Care
    9%
  • Financials
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

With 41% of the portfolio in technology, the sector allocation is heavily concentrated. This focus can lead to higher volatility, especially during market shifts affecting tech stocks. While the tech sector has been a strong performer, consider diversifying into other sectors like healthcare or consumer staples to reduce sector-specific risks. A more balanced sector allocation could provide a smoother performance trajectory and reduce dependency on the tech industry's fortunes.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Japan
    1%

The portfolio's geographic exposure is heavily skewed towards North America, accounting for 95% of the allocation. This concentration increases vulnerability to regional economic downturns. Expanding exposure to other regions, such as emerging markets or developed Europe, could enhance diversification and capture growth opportunities globally. A more balanced geographic allocation can mitigate risks associated with regional market fluctuations and strengthen the portfolio's overall resilience.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    28%
  • Mid-cap
    16%
  • Small-cap
    7%
  • Micro-cap
    1%

The portfolio's market capitalization allocation is predominantly in mega and large-cap stocks, comprising 70% of the total. While large-cap stocks often provide stability and consistent returns, smaller caps can offer higher growth potential. Consider increasing exposure to small and mid-cap stocks to capture potential growth opportunities and enhance diversification. A more balanced market cap distribution can improve the portfolio's risk-return profile and provide a more dynamic investment strategy.

Redundant positions Info

  • Invesco QQQ Trust
    ProShares UltraPro QQQ
    iShares MSCI World ETF
    Vanguard Growth Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains several highly correlated assets, particularly among tech-focused ETFs like Invesco QQQ Trust and ProShares UltraPro QQQ. High correlation means these assets tend to move together, reducing diversification benefits. In a market downturn, this could amplify losses. To enhance diversification, consider reducing exposure to overlapping assets and incorporating investments with lower correlation. This strategy can help manage risk and improve overall portfolio stability.

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 current portfolio could benefit from optimization using the Efficient Frontier, which seeks the best risk-return balance. However, before optimizing, consider addressing the high correlation among assets, as this limits diversification benefits. By reallocating within existing holdings or introducing new, less-correlated assets, you can achieve a more efficient risk-return profile. Optimization focuses on maximizing returns for a given level of risk, not necessarily diversification.

Dividends Info

  • iShares MSCI Emerging Markets ETF 0.70%
  • Invesco QQQ Trust 0.50%
  • Defiance Quantum 0.60%
  • ProShares UltraPro QQQ 1.20%
  • iShares MSCI World ETF 0.70%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.91%

The portfolio's dividend yield is relatively low at 0.91%, reflecting its growth-oriented focus. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation. If income is a goal, consider incorporating higher-yielding assets to boost the dividend component. Balancing growth and income can enhance the portfolio's return potential and provide more consistent cash flow, especially during volatile market periods.

Ongoing product costs Info

  • iShares MSCI Emerging Markets ETF 0.70%
  • Invesco QQQ Trust 0.20%
  • Defiance Quantum 0.40%
  • ProShares UltraPro QQQ 0.88%
  • iShares MSCI World ETF 0.24%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio is 0.20%, which is quite competitive. Lower costs can significantly enhance long-term returns by reducing the drag on performance. However, the ProShares UltraPro QQQ has a relatively high expense ratio of 0.88%, which could be a consideration for cost-conscious investors. Regularly reviewing and potentially replacing high-cost funds with lower-cost alternatives can improve net returns and contribute to the portfolio's overall efficiency.

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