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A growth-focused portfolio with high tech exposure and moderate diversification

Report created on Jan 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification
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Positions

The portfolio is heavily weighted towards individual stocks, with a significant concentration in technology. NVIDIA Corporation alone accounts for nearly 22% of the portfolio, indicating a strong tech focus. Such a concentration in a single sector can increase risk, especially if market conditions negatively impact tech stocks. A more balanced allocation across different sectors and asset types can help mitigate this risk. Comparing to common benchmarks, this portfolio is less diversified, which might lead to higher volatility. Consider diversifying further by including more varied asset classes like bonds or real estate.

Growth Info

Historically, the portfolio has shown impressive performance with a Compound Annual Growth Rate (CAGR) of 61.61%. This indicates that the portfolio has grown significantly over time, outperforming many benchmarks. However, it also experienced a maximum drawdown of -25.09%, which shows potential vulnerability during market downturns. While past performance is not a guarantee of future results, it does highlight the portfolio's high-risk, high-reward nature. Maintaining awareness of market conditions and being prepared for volatility is crucial for managing this portfolio.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential outcomes, suggests a wide range of future returns. The median projection is a staggering 195,228.77% increase, but this is based on past data and not a guaranteed outcome. Simulations show all scenarios with positive returns, but the variability indicates significant risk. While historical data informs these projections, they are not foolproof. Given the high-risk nature, consider balancing the portfolio to achieve more stable returns over time, especially if market conditions change.

Asset classes Info

  • Stocks
    95%
  • Cash
    3%
  • Other
    2%

The portfolio is predominantly composed of stocks, accounting for over 95% of the allocation, with minimal exposure to cash and bonds. This heavy reliance on equities can lead to significant volatility, especially in uncertain market conditions. A more balanced allocation across asset classes can provide stability. For example, incorporating more bonds could reduce risk and provide a buffer during stock market downturns. Compared to typical balanced portfolios, this one is highly aggressive, which is suitable for those with a high risk tolerance.

Sectors Info

  • Technology
    40%
  • Consumer Discretionary
    15%
  • Health Care
    15%
  • Consumer Staples
    14%
  • Industrials
    9%
  • Financials
    3%
  • Telecommunications
    2%

The portfolio is heavily skewed towards the technology sector, comprising almost 40% of the allocation. While tech stocks have shown robust growth, they are also susceptible to high volatility, especially during periods of regulatory changes or interest rate hikes. Other sectors like consumer cyclicals and healthcare are also present but with less weight. To reduce sector-specific risk, consider diversifying into less represented sectors, which can provide more stability and reduce the impact of sector-specific downturns.

Regions Info

  • North America
    88%
  • Europe Developed
    8%
  • Asia Emerging
    2%

With over 88% of the portfolio invested in North American assets, there is a significant regional concentration. This exposure can be beneficial during times of strong economic performance in the region but poses risks if the market faces downturns. The portfolio has limited exposure to international markets, which can offer diversification benefits. Expanding investments into other geographic regions can help mitigate regional risks and tap into growth opportunities in emerging and developed markets outside North America.

Redundant positions Info

  • GraniteShares 1.5x Long NVDA Daily ETF
    NVIDIA Corporation
    High correlation
  • Direxion Shares ETF Trust - Direxion Daily TSLA Bull 1.5X Shares
    Tesla Inc
    High correlation

The portfolio contains highly correlated asset pairs, particularly between NVIDIA and its leveraged ETF, as well as Tesla and its corresponding ETF. Such correlations mean these assets tend to move in the same direction, which can amplify risk during market downturns. While these assets may enhance returns during upswings, they offer limited diversification benefits. To improve risk management, consider reducing exposure to highly correlated assets and introducing more uncorrelated investments to better balance the portfolio.

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.

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The portfolio currently has potential for optimization using the Efficient Frontier, which suggests the best possible risk-return ratio for a given set of assets. By adjusting the allocation of current assets, you can potentially achieve a more efficient portfolio. This does not necessarily mean adding new assets but rather reallocating existing ones to better balance risk and return. While this approach can enhance returns, it's important to align any changes with your overall investment objectives and risk tolerance.

Dividends Info

  • ASML Holding NV 0.90%
  • Blackstone Group Inc 2.10%
  • Cintas Corporation 0.80%
  • Howmet Aerospace Inc 0.20%
  • Eli Lilly and Company 0.70%
  • Direxion Shares ETF Trust - Direxion Daily TSLA Bull 1.5X Shares 0.90%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • Vertiv Holdings Co 0.10%
  • Walmart Inc 0.90%
  • Weighted yield (per year) 0.47%

The portfolio's overall dividend yield is relatively low at 0.47%, reflecting its growth-focused nature. Dividends can provide a steady income stream and cushion against market volatility, which is beneficial for investors seeking regular cash flow. While growth stocks may offer higher capital appreciation, incorporating dividend-paying stocks can enhance income and reduce reliance on market gains. If income is a priority, consider increasing exposure to higher-yielding investments to balance growth and income objectives.

Ongoing product costs Info

  • GraniteShares 1.5x Long NVDA Daily ETF 1.15%
  • Direxion Shares ETF Trust - Direxion Daily TSLA Bull 1.5X Shares 0.96%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, which is advantageous for long-term investors. Lower costs mean more of your returns are retained, enhancing compounding over time. While some leveraged ETFs have higher fees, the overall cost remains competitive. It's important to regularly review and manage these costs to ensure they don't erode returns. Consider whether lower-cost alternatives are available for any high-fee assets, especially if they don't provide significant diversification benefits.

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