Aggressive tech-focused portfolio with high concentration and low geographic diversification

Report created on Jan 16, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in common stocks, with significant allocations to Amazon and Alphabet. This structure leans towards a high-growth strategy, typical for aggressive portfolios. However, the lack of diversification across asset types, such as bonds or real estate, increases risk. A more balanced portfolio often includes a mix of asset classes to mitigate volatility. Consider incorporating other asset types to reduce risk while maintaining growth potential.

Growth Info

Historically, the portfolio has shown a strong CAGR of 25.34%, indicating robust growth. However, this comes with a significant max drawdown of -62.48%, highlighting substantial volatility. Such fluctuations can be daunting during market downturns. The performance surpasses typical market benchmarks, suggesting a high-risk, high-reward approach. Diversifying and incorporating defensive assets could help stabilize returns during turbulent periods.

Projection Info

The Monte Carlo simulation, which uses past data to predict future outcomes, suggests varied potential results. With a median return of 142% but a 5th percentile loss of -97.6%, the portfolio could perform well but also faces considerable risk. While historical data provides insights, it doesn't guarantee future performance. To improve predictability, consider rebalancing the portfolio to include more stable assets that can cushion against extreme losses.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no exposure to other asset classes like bonds or commodities. This lack of diversification increases vulnerability to market swings. A well-rounded portfolio typically includes a mix of asset types to balance risk and return. Introducing other asset classes could enhance stability and provide a buffer against stock market volatility, especially in economic downturns.

Sectors Info

  • Technology
    43%
  • Consumer Discretionary
    26%
  • Telecommunications
    20%
  • Financials
    12%

With over 42% in technology, the portfolio is concentrated in a single sector, increasing exposure to sector-specific risks. While tech offers growth opportunities, it can be volatile, especially during regulatory changes or interest rate hikes. Diversifying into other sectors like healthcare or utilities could mitigate these risks and provide more balanced exposure. A diversified sector allocation aligns better with broader market trends and reduces overall risk.

Regions Info

  • North America
    100%

The portfolio's geographic exposure is entirely North American, limiting global diversification. This focus increases vulnerability to regional economic or political events. Expanding into international markets can enhance diversification and tap into growth opportunities in emerging economies. A more geographically diverse portfolio can better withstand regional downturns and benefit from global economic trends.

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 risk-return balance. This involves adjusting the current asset allocations to achieve maximum returns for a given level of risk. While this approach can enhance efficiency, it focuses on existing assets rather than diversification. Regularly reassessing allocations can help maintain an optimal risk-return profile.

Dividends Info

  • Alphabet Inc Class C 0.30%
  • Intel Corporation 1.90%
  • Visa Inc. Class A 0.70%
  • Weighted yield (per year) 0.32%

The portfolio's dividend yield is low at 0.32%, reflecting its growth-focused nature. While dividends provide steady income, growth stocks often reinvest earnings for expansion. For income-seeking investors, increasing exposure to dividend-paying stocks could enhance cash flow. However, for growth-oriented strategies, maintaining a focus on capital appreciation may be more suitable, depending on the investor's goals.

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