High Risk Single-Focused Portfolio with Strong US Equity Exposure and Potential for Significant Volatility

Report created on Nov 24, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is composed of two ETFs with a primary focus on US equities. The SPDR® Portfolio S&P 500 ETF makes up a significant 56.68% of the portfolio, while the Direxion Daily Small Cap Bull 3X Shares accounts for 43.32%. This indicates a highly concentrated investment strategy in the US stock market, particularly in large-cap and leveraged small-cap equities. The portfolio's composition reflects a high-risk, high-reward approach with potential for significant volatility due to the leveraged nature of the small-cap ETF. Diversification is limited, which can lead to increased risk exposure.

Growth Info

Historically, the portfolio has shown a strong performance with a CAGR of 19.86%. However, this comes with a significant max drawdown of -59.39%, indicating substantial risk during market downturns. The portfolio's performance is driven by a concentrated allocation in US equities, which have historically provided strong returns. The days that make up 90% of returns are limited to 20, suggesting that a small number of trading days have a significant impact on overall performance. This highlights the importance of timing in this portfolio's strategy.

Projection Info

Utilizing a Monte Carlo simulation with a hypothetical initial investment, the portfolio's future performance shows a wide range of potential outcomes. The 5th percentile projects a significant loss of -81.89%, while the 67th percentile suggests a substantial gain of 666.62%. The median outcome is a 232.97% increase. With 744 out of 1,000 simulations resulting in positive returns, the portfolio demonstrates potential for future growth but also significant risk. The annualized return across simulations is 21.6%, reflecting the aggressive nature of the portfolio.

Asset classes Info

  • Stocks
    96%
  • Other
    6%

The portfolio is heavily weighted towards stocks, comprising 96.19% of the total allocation, with a small allocation of 5.65% in other asset classes. This high concentration in equities aligns with the aggressive risk profile, aiming for capital appreciation. The limited exposure to other asset classes suggests a lack of diversification, which can increase vulnerability to market volatility. For a more balanced risk-return profile, consider incorporating a broader range of asset classes to mitigate potential downturns in the stock market.

Sectors Info

  • Technology
    25%
  • Financials
    15%
  • Health Care
    13%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Real Estate
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%

The sector allocation within the portfolio is diverse, with technology leading at 25.13%, followed by financial services and healthcare. Despite the variety, the portfolio remains heavily focused on sectors with high growth potential, aligning with an aggressive investment strategy. This concentration can lead to significant volatility, especially during sector-specific downturns. To reduce risk, consider a more balanced sector allocation that includes defensive sectors, which can provide stability during market fluctuations.

Regions Info

  • North America
    99%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99.08% of assets allocated there. This heavy focus on the US market exposes the portfolio to country-specific risks, such as economic downturns or political instability. Minimal exposure to other regions limits the potential benefits of geographic diversification, such as reduced volatility and access to growth opportunities in emerging markets. Consider diversifying across more regions to enhance resilience against localized market events.

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 optimization chart indicates that there is room for improvement in terms of risk and return balance. By moving along the efficient frontier, investors can explore options to either increase risk for potentially higher returns or reduce risk for more stability. Currently, the portfolio is positioned towards the higher-risk end of the spectrum. To optimize, consider diversifying across asset classes and geographies to achieve a more balanced risk-return profile, while still aligning with the desired aggressive investment strategy.

Dividends Info

  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Direxion Daily Small Cap Bull 3X Shares 0.80%
  • Weighted yield (per year) 1.03%

The portfolio offers a modest dividend yield of 1.03%, primarily driven by the SPDR® Portfolio S&P 500 ETF's yield of 1.2%. The Direxion Daily Small Cap Bull 3X Shares contributes a lower yield of 0.8%. While dividends can provide a steady income stream, the portfolio's focus on growth-oriented equities suggests that capital appreciation is the primary goal. For investors seeking higher income, consider reallocating to include higher-yielding assets or dividend-focused funds to enhance the portfolio's income-generating potential.

Ongoing product costs Info

  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Direxion Daily Small Cap Bull 3X Shares 1.08%
  • Weighted costs total (per year) 0.48%

The portfolio's total expense ratio (TER) stands at 0.48%, with the SPDR® Portfolio S&P 500 ETF offering a low cost of 0.02%, while the Direxion Daily Small Cap Bull 3X Shares has a higher cost of 1.08%. These costs impact overall returns, particularly in a high-risk portfolio where every basis point counts. Managing costs is crucial for optimizing performance. Consider evaluating the cost-effectiveness of each holding and explore lower-cost alternatives that align with the portfolio's investment strategy to enhance net returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey