Growth-Focused Portfolio with High Technology Exposure and Moderate Diversification for Risk-Tolerant Investors
Report created on Dec 5, 2024Risk profile
5/7
Diversification profile
3/5
Positions
-
IS iShares MSCI USA Islamic UCITS
ISDU - IE00B296QM64 50.00% -
IG Invesco Markets II plc - Invesco Dow Jones Islamic Global Developed Markets UCITS ETF USD Acc
IGDA - IE000UOXRAM8 30.00% -
SM VanEck Semiconductor UCITS ETF
SMH - IE00BMC38736 20.00%
The portfolio is composed of three ETFs, with a significant portion allocated to the iShares MSCI USA Islamic UCITS at 50%, followed by the Invesco Dow Jones Islamic Global Developed Markets UCITS ETF at 30%, and the VanEck Semiconductor UCITS ETF at 20%. This composition indicates a strong emphasis on Islamic-compliant investments, particularly in the US market. The portfolio is moderately diversified, which suggests a focus on specific regions and sectors. This setup may appeal to investors who prioritize ethical investing while seeking exposure to growth-oriented markets.
Growth
Historically, the portfolio has demonstrated a strong performance with a compound annual growth rate (CAGR) of 15.9%. The maximum drawdown of -23.58% indicates periods of significant volatility, which is typical for growth-focused portfolios. The fact that 90% of returns were generated in just 12 days underscores the potential for high returns but also highlights the importance of timing and market conditions. This historical performance suggests that while the portfolio can deliver substantial returns, it requires a tolerance for market fluctuations and a long-term investment horizon.
Projection
Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected based on a hypothetical initial investment. The results show a wide range of potential outcomes, with the 5th percentile at 65.54% and the 67th percentile at 1,149.52%. The median outcome suggests a potential growth of 679.34%. With 983 out of 1,000 simulations showing positive returns, the portfolio's projected annualized return is 19.31%. This simulation highlights the potential for substantial growth, but also the inherent uncertainty and variability in future market conditions.
Asset classes
- Stocks 100%
The portfolio is heavily weighted towards stocks, with 99.88% of the assets in equities and a minimal cash holding of 0.12%. This allocation indicates a high-risk, high-reward strategy typical of growth-oriented portfolios. The lack of diversification into other asset classes such as bonds or real estate may increase volatility but also enhances the potential for higher returns. Investors should be aware of the increased risk associated with such a concentrated equity allocation and consider their risk tolerance and investment goals when maintaining this balance.
Sectors
- Technology 55%
- Health Care 9%
- Consumer Discretionary 9%
- Industrials 7%
- Energy 7%
- Consumer Staples 4%
- Basic Materials 4%
- Telecommunications 2%
- Real Estate 1%
- Financials 1%
The sector allocation of the portfolio is heavily skewed towards technology, which constitutes 55.49% of the total holdings. Other notable sectors include healthcare, consumer cyclicals, and industrials. This concentration in technology suggests a strong belief in the growth potential of this sector but also exposes the portfolio to sector-specific risks. The limited exposure to defensive sectors like utilities and consumer defensive indicates a focus on growth rather than stability. Investors should consider whether this sector allocation aligns with their risk appetite and long-term investment strategy.
Regions
- North America 90%
- Europe Developed 6%
- Asia Developed 2%
- Japan 1%
Geographically, the portfolio is predominantly invested in North America, accounting for 90.17% of the total allocation. This heavy weighting towards the US market reflects a focus on developed markets with strong growth potential. The remaining exposure is spread across Europe, Asia, and other regions, but at much lower percentages. This geographic concentration may limit the benefits of international diversification and expose the portfolio to regional economic and political risks. Investors should assess whether this geographic focus aligns with their investment objectives and risk tolerance.
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 optimization chart indicates that there is room for improvement in terms of risk and return balance. Investors can explore the efficient frontier to optimize their portfolio by adjusting asset allocations. Moving towards a more conservative portfolio would involve increasing exposure to lower-risk assets, while a riskier approach would require a greater allocation to equities. However, given the portfolio's current focus on growth, investors should first ensure that their risk tolerance aligns with their financial goals before making significant changes.
Ongoing product costs
- Invesco Markets II plc - Invesco Dow Jones Islamic Global Developed Markets UCITS ETF USD Acc 0.40%
- iShares MSCI USA Islamic UCITS 0.50%
- VanEck Semiconductor UCITS ETF 0.35%
- Weighted costs total (per year) 0.44%
With a total expense ratio (TER) of 0.44%, the portfolio's costs are relatively low, which is beneficial for long-term performance. The individual ETFs have expense ratios ranging from 0.35% to 0.5%, indicating a cost-effective approach to achieving broad market exposure. Keeping investment costs low is crucial for maximizing returns, especially in a growth-focused portfolio. Investors should continue to monitor expense ratios and consider the impact of costs on their overall investment strategy, ensuring that they remain aligned with their financial goals.
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