A highly concentrated growth-focused portfolio with significant exposure to the S&P 500

Report created on Feb 21, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily concentrated with 45% in the ProShares UltraPro S&P500 ETF, indicating a strong focus on U.S. large-cap equities. This concentration suggests an aggressive growth strategy but may lack diversification. Comparing this to a diversified benchmark, the allocation is notably skewed towards a single index, which could increase risk. For a more balanced approach, consider diversifying across additional asset classes or indices. This would help mitigate potential volatility and align the portfolio closer to a standard growth benchmark that typically spreads risk more evenly across different sectors and regions.

Growth Info

The portfolio has demonstrated impressive historic performance with a CAGR of 20.07%, significantly outperforming typical market benchmarks. However, it also experienced a maximum drawdown of -26.19%, indicating considerable volatility. This performance trend suggests potential high rewards but also substantial risks. To better manage risk, it's crucial to understand that past performance does not guarantee future results. Incorporating assets that historically have lower correlation with the S&P 500 could help in stabilizing returns during market downturns, enhancing the portfolio's resilience.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a median (50th percentile) return of 295.3% and a high probability (67th percentile) of achieving 523.9% returns. The simulation uses historical data to estimate future performance, but it's important to note that these projections are not guarantees. With 906 out of 1,000 simulations yielding positive returns, the outlook appears optimistic. To prepare for different scenarios, consider stress-testing the portfolio under various economic conditions to ensure it aligns with your risk tolerance and investment goals.

Asset classes Info

  • Cash
    215%
  • Stocks
    35%
  • Other
    13%

The portfolio's asset allocation is heavily skewed towards cash at 215%, which is unusual and may indicate a misunderstanding in reporting or a strategic choice to hold leveraged positions. Stocks account for 35%, while other assets make up 13%. Compared to typical benchmarks, this allocation is unconventional. To enhance diversification, consider reallocating some cash into equities or fixed income, balancing risk and potential returns. A more traditional asset mix could provide stability and improve the overall risk-return profile.

Sectors Info

  • Technology
    18%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Industrials
    5%
  • Telecommunications
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    1%

Sector allocation reveals a concentration in technology at 18%, which can lead to increased volatility, especially during periods of tech sector instability. Other sectors like financial services and consumer cyclicals are underrepresented, limiting diversification benefits. A more balanced sector distribution could better align with a diversified growth strategy, reducing sector-specific risks. Consider adjusting sector weights to reflect broader market trends and economic cycles, ensuring the portfolio remains resilient against sector-specific downturns.

Regions Info

  • North America
    59%
  • Europe Developed
    1%

The portfolio's geographic exposure is predominantly North American at 59%, with negligible allocations to Europe and Asia. This concentration increases vulnerability to regional economic fluctuations. To enhance global diversification, consider incorporating international equities from developed and emerging markets. This could mitigate risks associated with U.S. market volatility and tap into growth opportunities abroad. Aligning geographic exposure closer to global benchmarks can provide a more balanced risk profile and potential for enhanced returns.

Market capitalization Info

  • Mega-cap
    11%
  • Large-cap
    10%
  • Mid-cap
    10%
  • Small-cap
    4%

The portfolio's market capitalization exposure is skewed towards mega and big-cap stocks, with limited small-cap exposure. While large-cap stocks offer stability and liquidity, small-cap stocks can provide higher growth potential. Balancing market cap exposure can enhance diversification and potentially improve long-term returns. Consider increasing small-cap allocations to capture growth opportunities while maintaining a core of stable, large-cap investments. This balance can optimize the risk-return profile and align with a growth-focused strategy.

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 risk-return optimization using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, the portfolio's concentrated structure may not be fully optimized for risk-adjusted returns. By reallocating assets within the current selection, it's possible to enhance efficiency. This involves adjusting weights to achieve a balance that maximizes returns for a given level of risk. Regularly reviewing and rebalancing the portfolio can help maintain alignment with the Efficient Frontier and overall investment goals.

Dividends Info

  • Simplify Exchange Traded Funds 4.50%
  • KFA Mount Lucas Index Strategy ETF 0.80%
  • ProShares UltraPro S&P500 0.60%
  • Weighted yield (per year) 1.06%

The portfolio's overall dividend yield is 1.06%, with Simplify Exchange Traded Funds providing the highest yield at 4.50%. While dividends contribute to total returns, the focus appears to be on growth rather than income generation. For investors seeking income, increasing exposure to higher-yielding assets could be beneficial. However, given the growth focus, maintaining or slightly adjusting the dividend strategy may suffice. Balancing growth and income can create a more comprehensive investment approach, aligning with diverse financial goals.

Ongoing product costs Info

  • AGFiQ U.S. Market Neutral Anti-Beta Fund 1.43%
  • Simplify Exchange Traded Funds 0.78%
  • SPDR Gold MiniShares 0.10%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • ProShares UltraPro S&P500 0.92%
  • Weighted costs total (per year) 0.89%

Portfolio costs are moderate with a Total Expense Ratio (TER) of 0.89%. The AGFiQ U.S. Market Neutral Anti-Beta Fund has the highest cost at 1.43%, which could impact long-term returns. Reducing costs can significantly enhance performance over time, especially in a growth-focused portfolio. Consider evaluating the cost-benefit of each ETF and exploring lower-cost alternatives that align with the investment strategy. Keeping expenses in check is crucial for maximizing net returns and achieving financial objectives efficiently.

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