Moderately Diversified Growth Portfolio with High Risk and Strong Technology Focus Offers Solid Historic Performance

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 moderate to high risk tolerance, seeking capital appreciation over the long term. The investor is likely focused on growth, willing to endure market volatility for the potential of higher returns. Their investment horizon is long-term, allowing them to ride out short-term market fluctuations. The investor is comfortable with a concentrated exposure to the technology sector and the US market, reflecting confidence in these areas' growth prospects. They value cost-efficiency and are open to optimizing their portfolio for better diversification.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Franklin FTSE India ETF
    FLIN - US35473P7693
    20.00%
  • iShares Expanded Tech Sector ETF
    IGM - US4642875490
    20.00%
  • Defiance Quantum
    QTUM - US26922A4206
    10.00%

This portfolio is composed of four ETFs, with a significant portion, 50%, allocated to the Vanguard S&P 500 ETF. The remaining 50% is distributed among the Franklin FTSE India ETF, iShares Expanded Tech Sector ETF, and Defiance Quantum. This allocation indicates a strong focus on the US market and technology sector. While it is moderately diversified, the portfolio leans heavily towards growth, given its risk classification. The portfolio's structure suggests a higher risk appetite with a focus on capital appreciation, making it suitable for investors willing to take on more risk for potential higher returns.

Growth Info

Historically, this portfolio has performed impressively with a CAGR of 16.63%. Assuming a hypothetical initial investment, the portfolio has shown resilience, though it experienced a maximum drawdown of -34.11%. This indicates periods of significant volatility, which is typical for growth-oriented portfolios. The concentration of returns over just 20 days highlights the importance of staying invested to capture these gains. While past performance is not indicative of future results, the historical data suggests that the portfolio has been effective in generating returns for investors who can tolerate its inherent volatility.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, we projected the future performance of the portfolio based on a hypothetical initial investment. The results show a 50th percentile outcome of a 762.77% return, indicating a strong potential for growth. The 5th percentile suggests a more conservative outcome with a 97.7% return, while the 67th percentile projects an impressive 1,178.46% return. With 991 simulations showing positive returns, the annualized return across all simulations is 19.42%. This forward projection reinforces the portfolio's growth potential, albeit with inherent risks and volatility.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is heavily weighted in stocks, accounting for 99.61% of its composition, with a minimal cash allocation. This high equity exposure aligns with the growth profile, offering potential for substantial capital appreciation. However, it also implies higher volatility and risk. For investors seeking to balance growth with stability, incorporating other asset classes like bonds could provide a buffer against market fluctuations. Diversifying across asset classes can help mitigate risk and enhance the overall risk-adjusted returns of the portfolio, aligning better with long-term financial goals.

Sectors

  • Technology
    42%
  • Financials
    11%
  • Telecommunications
    10%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Health Care
    7%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation of this portfolio is predominantly technology-focused, with 42.4% invested in this sector. Other significant sectors include Financial Services, Communication Services, and Consumer Cyclicals. This heavy tech allocation could lead to higher volatility, especially during market downturns affecting the tech industry. While the focus on high-growth sectors can drive returns, it also increases sector-specific risks. To enhance diversification, consider spreading investments more evenly across sectors. This approach can help reduce portfolio risk and provide more consistent returns across different market conditions.

Regions

  • North America
    76%
  • Asia Emerging
    20%
  • Europe Developed
    2%
  • Japan
    1%
  • Asia Developed
    1%
  • Africa/Middle East
    0%

Geographically, the portfolio is primarily concentrated in North America, representing 75.97% of the total allocation. Asia Emerging follows with 20.45%, while other regions like Europe Developed and Japan have minimal representation. This geographic composition reflects a strong bias towards the US market, which can be beneficial in times of US economic strength but risky if the market underperforms. To mitigate geographic risk, consider diversifying into other regions. A more balanced geographic allocation can provide exposure to different economic cycles and potentially enhance portfolio stability.

Redundant positions

  • Vanguard S&P 500 ETF
    iShares Expanded Tech Sector ETF
    Defiance Quantum
    High correlation

The portfolio exhibits high correlations among its assets, particularly between the Vanguard S&P 500 ETF, iShares Expanded Tech Sector ETF, and Defiance Quantum. This indicates that these assets often move in the same direction, which may reduce the diversification benefits. High correlation can lead to increased portfolio volatility, especially during market downturns. To improve diversification, consider reducing exposure to highly correlated assets and introducing investments that have lower correlations with existing holdings. This strategy can help manage risk and potentially improve the portfolio's overall performance.

Dividends

  • Franklin FTSE India ETF 1.60%
  • iShares Expanded Tech Sector ETF 0.30%
  • Defiance Quantum 0.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.05%

The portfolio's dividend yield stands at 1.05%, with contributions from the Franklin FTSE India ETF, iShares Expanded Tech Sector ETF, Defiance Quantum, and Vanguard S&P 500 ETF. This yield is relatively modest, reflecting the portfolio's growth orientation rather than income generation. While dividends can provide a steady income stream, the focus here is on capital appreciation. For investors seeking higher income, consider increasing exposure to dividend-paying assets. Balancing growth with income can provide a more comprehensive investment strategy, catering to both capital appreciation and cash flow needs.

Ongoing product costs

  • Franklin FTSE India ETF 0.19%
  • iShares Expanded Tech Sector ETF 0.41%
  • Defiance Quantum 0.40%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.18%

The total expense ratio (TER) for this portfolio is 0.18%, which is relatively low and cost-effective. The Vanguard S&P 500 ETF contributes significantly to this low cost with its 0.03% expense ratio. Other ETFs like the Franklin FTSE India ETF, iShares Expanded Tech Sector ETF, and Defiance Quantum have higher costs but are still within a reasonable range. Keeping costs low is crucial for maximizing net returns over time. Regularly reviewing and managing the expense ratios of the investments can help maintain cost efficiency and enhance the portfolio's overall return potential.

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.

Before optimizing, focus on reducing overlapping, highly correlated assets that don't offer diversification benefits. To achieve a riskier portfolio, consider increasing exposure to growth-oriented assets, while a more conservative approach would involve shifting towards bonds or other low-risk investments. Moving along the efficient frontier can help balance risk and return, aligning the portfolio with personal financial goals. While optimizing, it's crucial to maintain a diversified asset allocation to manage risk effectively. Regularly reviewing and adjusting the portfolio can ensure it remains aligned with changing market conditions and investment objectives.

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