A concentrated tech-heavy portfolio with strong past performance and moderate risk

Report created on Dec 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in the Invesco QQQ Trust, which makes up over 96% of the total holdings, with a small allocation to the Vanguard S&P 500 ETF. Such concentration in a single ETF can lead to increased risk, as it lacks diversification across different asset classes and sectors. Typically, a more balanced portfolio would include a mix of equities, bonds, and other asset types to mitigate risk. Consider diversifying by adding different asset classes to enhance stability and reduce vulnerability to sector-specific downturns.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 19.04%, indicating strong growth over time. However, it also experienced a significant maximum drawdown of -34.8%, highlighting potential volatility. While the impressive CAGR suggests robust returns, it's essential to remember that past performance doesn't guarantee future results. Consider strategies to manage drawdowns, such as incorporating more stable asset classes or hedging techniques, to protect against future market downturns.

Projection Info

The Monte Carlo simulation projects potential outcomes for the portfolio based on historical data, with a median return of 710.71% and a 5th percentile return of 151.18%. While these projections indicate a high likelihood of positive returns, it's crucial to understand that they are based on historical patterns and assumptions. As such, they can't predict future market conditions with certainty. Regularly reassess your portfolio's alignment with your risk tolerance and goals, and adjust as necessary to maintain a balanced approach.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible cash position. This allocation provides significant growth potential but also increases exposure to market volatility. A more diversified portfolio might include bonds or other asset classes to provide stability and income. Consider reallocating a portion of your investments into different asset classes to balance growth with risk mitigation, ensuring your portfolio can withstand various market conditions.

Sectors Info

  • Technology
    50%
  • Telecommunications
    16%
  • Consumer Discretionary
    15%
  • Consumer Staples
    5%
  • Health Care
    5%
  • Industrials
    3%
  • Basic Materials
    1%
  • Utilities
    1%
  • Financials
    1%
  • Energy
    1%

The portfolio is highly concentrated in the technology sector, making up over 50% of the total holdings. While tech stocks have driven substantial growth, they can also be volatile, especially during interest rate changes or regulatory shifts. A well-diversified portfolio typically spreads investments across multiple sectors to reduce sector-specific risks. Consider reallocating to include sectors like healthcare, utilities, or financial services to achieve a more balanced sectoral distribution and enhance resilience.

Regions Info

  • North America
    98%
  • Europe Developed
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, with minimal exposure to other regions. This lack of geographic diversification can increase vulnerability to region-specific economic downturns or policy changes. A more balanced geographic allocation might include greater exposure to developed and emerging markets outside North America. Consider expanding your investments into other regions to capture global growth opportunities and reduce reliance on a single economic environment.

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's risk-return profile could potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This optimization focuses on reallocating existing holdings to achieve maximum returns for a given level of risk. Consider utilizing tools or consulting with a financial advisor to explore how adjustments in asset allocation could improve efficiency. Remember, optimization aims to enhance the current portfolio structure rather than achieving diversification.

Dividends Info

  • Invesco QQQ Trust 0.40%
  • Vanguard S&P 500 ETF 0.90%
  • Weighted yield (per year) 0.42%

The portfolio's dividend yield is relatively low at 0.42%, reflecting its growth-oriented nature. While dividends are not a primary focus here, they can provide a steady income stream and contribute to total returns over time. If income generation is a goal, consider adding higher-yielding assets to the mix. This could involve including dividend-focused ETFs or stocks to balance growth with income, aligning with your overall investment strategy.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, which is quite competitive. Low costs are beneficial as they help maximize net returns over time. Keeping expense ratios low is a positive aspect of this portfolio, allowing more of the investment's growth to benefit the investor. Continue monitoring costs and explore opportunities to further reduce them, such as switching to lower-cost funds or negotiating fees, to enhance long-term returns.

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