A tech-focused growth portfolio with high concentration and limited geographic diversification

Report created on Jan 12, 2025

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

Growth Investors

This portfolio suits an investor with a high risk tolerance and a focus on growth. It is ideal for those seeking substantial capital appreciation over a long-term horizon, willing to withstand significant volatility. The concentration in technology and North American equities may appeal to investors confident in these markets. However, it requires a proactive approach to managing risk through diversification and regular portfolio reviews.

Positions

This portfolio is heavily weighted in ETFs, each holding an 18% share except for the VanEck Semiconductor ETF at 10%. It primarily consists of technology-focused ETFs, reflecting a concentrated investment strategy. Compared to common benchmarks, this portfolio lacks diversification across different asset classes and sectors. While concentrated portfolios can offer high returns, they also carry increased risk. To balance risk and reward, consider diversifying into other asset classes such as bonds or real estate to provide stability during market fluctuations.

Growth Info

The portfolio has demonstrated a strong historic performance with a Compound Annual Growth Rate (CAGR) of 17.44%. However, it also experienced a significant maximum drawdown of 34.06%, indicating vulnerability during market downturns. This performance aligns with high-risk, high-reward growth strategies. While past performance is not indicative of future results, understanding these trends can help in managing expectations. Consider strategies to mitigate potential downturns, such as incorporating defensive assets or increasing cash reserves.

Projection Info

Monte Carlo simulations, using historical data, suggest a median return of 845.51% with potential outcomes ranging from 108.85% to 1,356.9%. These projections illustrate the wide range of possible future returns, emphasizing the portfolio's risk profile. While simulations provide valuable insights, they rely on historical data and cannot predict future market conditions. To enhance potential outcomes, regularly review and adjust the portfolio to align with evolving market trends and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with a 99.88% allocation, leaving minimal cash reserves. This concentration in equities can lead to high volatility, especially during market corrections. Diversification across asset classes is crucial for risk management. To enhance stability, consider introducing fixed-income securities or alternative investments. These can serve as a buffer against equity market fluctuations, providing a more balanced risk-return profile.

Sectors Info

  • Technology
    61%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Health Care
    5%
  • Financials
    5%
  • Industrials
    3%
  • Consumer Staples
    3%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

Technology dominates the sector allocation with over 60% exposure, followed by smaller allocations in consumer cyclicals and communication services. This concentration aligns with a high-growth strategy but can lead to increased volatility, especially during economic downturns or tech sector corrections. A more balanced sector allocation can reduce portfolio risk. Consider exploring opportunities in underrepresented sectors like healthcare or financial services, which can offer growth potential and diversification benefits.

Regions Info

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

The portfolio is primarily concentrated in North American assets, with 97.26% exposure. This limited geographic diversification can increase vulnerability to regional economic downturns. Global diversification can enhance risk management by spreading exposure across different economic environments. Consider increasing allocations to developed and emerging markets outside North America to capture growth opportunities and reduce regional risks.

Redundant positions Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    Vanguard Growth Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among growth-focused ETFs. High correlation means these assets tend to move in the same direction, reducing diversification benefits. In market downturns, this can lead to amplified losses. To improve diversification, consider replacing some highly correlated ETFs with those that have lower correlation, potentially from different sectors or asset classes. This adjustment can enhance the portfolio's resilience during volatile periods.

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 be optimized for better risk-return ratios by addressing the high correlation among assets. The Efficient Frontier suggests an expected return of 20.31% with a risk level of 21.91% through reallocation. This optimization focuses on achieving the best possible risk-return ratio with the current assets. Consider adjusting allocations to reduce overlap and enhance diversification, which can lead to a more efficient portfolio.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.65%

The portfolio's total dividend yield is 0.65%, reflecting its growth-oriented focus. While dividends provide a steady income stream, their contribution is minimal in this portfolio. Growth investors typically prioritize capital appreciation over income generation. However, incorporating higher-yield assets can offer additional income and reduce reliance on capital gains. Consider balancing growth and income by including dividend-focused ETFs or stocks with stable payouts.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is impressively low and supports better long-term performance by minimizing costs. Low fees are crucial for maximizing returns over time, especially in a growth-focused portfolio. This cost efficiency is a positive aspect, allowing more capital to be invested and compounded. Continue to monitor and compare fees across investments to ensure ongoing cost-effectiveness.

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