This portfolio has only about 1 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.
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Balanced Tech-Focused Portfolio with High Historical Returns and Moderate Diversification Needs Rebalancing

Report created on Jul 1, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of four ETFs, with a strong focus on technology, making up 40% and 24% of the composition. While it offers exposure to dividends and quality growth, the emphasis on tech may overshadow other sectors. This composition suggests a tilt towards growth-oriented assets, which can be beneficial in a rising market. However, the lack of diversification could pose risks in volatile markets. Consider balancing the tech-heavy allocation by incorporating more diverse sectors to reduce sector-specific risks.

Growth Info

Historically, the portfolio has performed exceptionally well, boasting a CAGR of 29.86%. With a maximum drawdown of -13.01%, it shows resilience during downturns. The concentrated returns across just 11 days indicate significant volatility and reliance on market timing. Such performance highlights the potential for high returns but also underscores the importance of being prepared for market swings. Maintaining a balanced approach can help mitigate the impact of sudden market shifts and sustain long-term growth.

Projection Info

Using a Monte Carlo simulation, the portfolio's future performance was projected with 1,000 simulations. The median outcome suggests a potential return of 6,414.25%, with all simulations showing positive returns. This suggests a promising growth trajectory, but the wide range between the 5th and 67th percentiles highlights inherent risks. Monte Carlo simulations provide a probabilistic view of potential outcomes, emphasizing the importance of diversification to navigate uncertainties. Consider strategies that balance high growth potential with risk management.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with an allocation of 99.88%, leaving negligible room for cash or other asset classes. While stocks offer growth potential, this near-exclusive focus can increase volatility and risk. A more balanced asset class distribution could enhance stability, especially during market downturns. Diversifying into bonds or other asset classes may provide a buffer against stock market fluctuations, aligning better with a balanced risk profile.

Sectors Info

  • Technology
    72%
  • Telecommunications
    5%
  • Industrials
    4%
  • Consumer Discretionary
    4%
  • Consumer Staples
    3%
  • Health Care
    3%
  • Energy
    3%
  • Financials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is predominantly technology at 71.55%, with minimal exposure to other sectors like communication services and industrials. This concentration can drive high returns when the tech sector thrives but also exposes the portfolio to sector-specific downturns. A broader sector diversification could mitigate these risks and provide more consistent performance across different market conditions. Consider gradually reallocating some tech exposure to underrepresented sectors for a more balanced sector mix.

Regions Info

  • North America
    94%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America at 94.50%, with limited exposure to other regions. This focus on a single region can increase vulnerability to local market fluctuations and geopolitical risks. Incorporating a more global perspective could enhance diversification and tap into growth opportunities in emerging and developed markets alike. A wider geographic spread can also help cushion the impact of regional market downturns.

Redundant positions Info

  • Fidelity® MSCI Information Technology Index ETF
    Hartford US Quality Growth ETF
    First Trust NASDAQ-100-Technology Sector Index Fund
    High correlation

The portfolio contains highly correlated assets, particularly among the technology-focused ETFs. This correlation diminishes diversification benefits and can lead to synchronized movements during market shifts. Reducing overlap by selecting less correlated investments can enhance diversification and reduce risk. Identifying and replacing highly correlated assets with those having low correlation can improve the portfolio's resilience and performance consistency.

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.

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Before optimizing the portfolio, addressing the high correlation among assets is crucial. Reducing overlap can enhance diversification and improve risk-adjusted returns. Moving along the efficient frontier can help achieve a desired risk-return balance, either by increasing risk for higher returns or opting for a more conservative approach. Focus on diversification and adjusting sector exposure to optimize the portfolio's efficiency and resilience.

Dividends Info

  • Fidelity® High Dividend ETF 2.70%
  • Fidelity® MSCI Information Technology Index ETF 0.60%
  • Hartford US Quality Growth ETF 0.40%
  • Weighted yield (per year) 0.75%

With a total yield of 0.75%, the portfolio offers modest dividend income, primarily from the Fidelity® High Dividend ETF. While dividends can provide a steady income stream, the current yield is relatively low. Enhancing dividend income could improve cash flow, especially in volatile markets. Consider incorporating higher-yielding assets or increasing allocation to dividend-focused investments to enhance income potential without compromising growth.

Ongoing product costs Info

  • Fidelity® High Dividend ETF 0.15%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Hartford US Quality Growth ETF 0.34%
  • First Trust NASDAQ-100-Technology Sector Index Fund 0.57%
  • Weighted costs total (per year) 0.33%

The portfolio's total expense ratio of 0.33% is reasonably low, reflecting cost-effective management. However, the First Trust NASDAQ-100-Technology Sector Index Fund carries a higher fee of 0.57%, impacting overall costs. Keeping investment costs low is crucial for maximizing returns. Regularly reviewing and optimizing fund choices can help maintain a balance between cost and performance. Consider exploring lower-cost alternatives to optimize cost-efficiency without sacrificing quality.

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