A highly concentrated aggressive portfolio with a strong focus on technology and growth

Report created on Jan 7, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated, with nearly equal allocations in two ETFs and a single stock. This lack of diversification can increase risk, as it relies heavily on the performance of a few assets. In comparison, a balanced portfolio often includes a mix of asset types like bonds and international stocks. To improve diversification, consider adding more varied asset classes to reduce reliance on a few holdings.

Growth Info

Historically, this portfolio has shown impressive growth, with a CAGR of 35.92%. However, it comes with significant volatility, evidenced by a max drawdown of -57.74%. This highlights the risk of large fluctuations in value. While past performance is not a guarantee of future results, understanding this volatility can help set expectations and guide risk management strategies.

Projection Info

Future projections using Monte Carlo simulations suggest a wide range of outcomes, with a median return of 4,298.22%. This method uses historical data to model potential future returns, but remember, it's not a crystal ball. The optimistic projections show potential, but also highlight the inherent uncertainty. Diversifying the portfolio could help stabilize these projections and manage risk.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely invested in stocks, with negligible cash holdings. This heavy stock allocation can lead to higher returns but also increases exposure to market volatility. A more balanced portfolio might include bonds or other asset classes to enhance stability and provide downside protection, especially during market downturns.

Sectors Info

  • Technology
    81%
  • Consumer Discretionary
    5%
  • Telecommunications
    5%
  • Health Care
    4%
  • Financials
    3%
  • Industrials
    1%
  • Consumer Staples
    1%
  • Basic Materials
    1%

With over 80% of the portfolio in the technology sector, there is a significant concentration risk. While this can lead to high returns in tech booms, it also exposes the portfolio to sector-specific downturns. A more balanced sector allocation could mitigate this risk and provide exposure to other industries that may perform well under different economic conditions.

Regions Info

  • North America
    100%

The portfolio is overwhelmingly focused on North American assets, limiting exposure to international markets. This geographic concentration can reduce diversification benefits and miss out on growth opportunities abroad. Incorporating more international holdings could enhance diversification and potentially improve risk-adjusted returns.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio's assets are highly correlated, particularly between the two major ETFs. This means they tend to move in the same direction, which can limit the benefits of diversification. Reducing correlation by adding less correlated assets can help smooth out returns and reduce the overall portfolio risk.

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 benefit from optimization using the Efficient Frontier, which balances risk and return. However, before optimizing, addressing the high correlation and concentration issues is crucial. By diversifying and reducing overlap, the portfolio can be better positioned to achieve an optimal risk-return ratio.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Weighted yield (per year) 0.34%

The portfolio's dividend yield is relatively low at 0.34%, reflecting its growth-focused nature. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income. Investors seeking income may want to consider adding higher-yielding assets to balance growth with cash flow.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are impressively low, with a total expense ratio of 0.05%. This is beneficial for long-term performance, as lower costs mean more of the returns stay in your pocket. Maintaining low costs is a positive aspect of this portfolio, supporting better net returns over time.

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