A high-growth aggressive portfolio with strong tech focus and moderate geographic diversification

Report created on Dec 30, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards individual stocks, with a significant allocation of 20% in the Vanguard S&P 500 ETF. The rest is split among seven common stocks, with Amazon and Alphabet each holding a 15% share. This composition leans towards high-growth opportunities, but lacks significant exposure to other asset classes like bonds or international equities. A more balanced mix could reduce risk and improve stability over time, particularly during market downturns.

Growth Info

Historically, the portfolio has performed exceptionally well, boasting a Compound Annual Growth Rate (CAGR) of 25.93%. This suggests strong past returns, especially given the aggressive nature of the investments. However, the maximum drawdown of -40.97% highlights potential volatility. While past performance is informative, it does not guarantee future success. It’s crucial to consider how much risk you are comfortable taking on for potential high returns.

Projection Info

The portfolio's forward projection, based on Monte Carlo simulations, shows a wide range of potential outcomes. With a 50th percentile return of 1,090.81% and a 67th percentile at 2,385.55%, there's significant upside potential. However, the 5th percentile suggests a possible -41.81% loss. Monte Carlo simulations use historical data to estimate future performance, but they are not foolproof. It's wise to prepare for various scenarios, including less favorable outcomes.

Asset classes Info

  • Stocks
    100%

This portfolio is nearly entirely composed of stocks, with a negligible cash component. Such concentration in a single asset class can lead to increased volatility and risk, particularly in bear markets. Typically, a more diversified allocation includes bonds, which can provide stability and income. Consider adding fixed-income securities or other asset classes to better weather market fluctuations and achieve a more balanced risk-return profile.

Sectors Info

  • Financials
    18%
  • Consumer Discretionary
    17%
  • Telecommunications
    17%
  • Technology
    17%
  • Industrials
    12%
  • Consumer Staples
    11%
  • Health Care
    7%
  • Energy
    1%
  • Utilities
    1%

The portfolio is heavily concentrated in sectors like Financial Services, Consumer Cyclicals, and Technology, each around 17%. While this can drive growth, it also increases exposure to sector-specific risks, such as regulatory changes or technological disruptions. A broader sector diversification could mitigate these risks. For instance, adding more to sectors like Utilities or Real Estate might provide more stability and income, balancing the high-growth sectors.

Regions Info

  • North America
    95%
  • Latin America
    5%

Geographically, the portfolio is predominantly focused on North America, with 94.88% exposure. This limits diversification benefits that come from investing in other regions. While the U.S. market has historically been strong, international markets can offer growth opportunities and risk mitigation. Increasing exposure to Europe or Asia could enhance diversification and potentially improve returns by capitalizing on global economic growth.

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 potentially be optimized using the Efficient Frontier concept to improve the risk-return balance. This involves adjusting the allocation between existing assets to achieve the best possible return for a given level of risk. While this optimization focuses on risk and return, it doesn't necessarily address other goals like diversification. Regularly reviewing and rebalancing the portfolio can help maintain an optimal risk-return profile.

Dividends Info

  • Costco Wholesale Corp 0.50%
  • Alphabet Inc Class C 0.30%
  • UnitedHealth Group Incorporated 1.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.42%

The portfolio's dividend yield is relatively low at 0.42%, reflecting its focus on growth rather than income. While dividends can provide steady returns, they are less critical for growth-focused portfolios. However, including higher-yielding stocks or funds could offer a buffer during market downturns. Balancing growth and income can help achieve a more stable return profile over time, especially for investors nearing retirement.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.01%

The portfolio benefits from low costs, with the Vanguard S&P 500 ETF having a Total Expense Ratio (TER) of just 0.03%. Keeping costs low is advantageous for long-term returns, as fees can significantly erode gains over time. This aligns well with best practices, suggesting the portfolio is cost-efficient. Continue to monitor and compare fees regularly to ensure your investments remain competitive and cost-effective.

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