A concentrated portfolio with strong US focus and moderate risk suited for growth-oriented investors

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is composed entirely of ETFs, with Invesco EQQQ NASDAQ-100 and Vanguard S&P 500 each holding 40% and WisdomTree US Equity Income at 20%. This structure indicates a strong focus on US equities, specifically large-cap stocks, with an emphasis on growth and income. The reliance on ETFs provides diversification within each fund but limits exposure to other asset classes. While the composition leans heavily towards equities, it may benefit from incorporating other asset types like bonds or commodities to balance risk and potential returns.

Growth Info

Historically, the portfolio has shown impressive growth with a compound annual growth rate (CAGR) of 17.04% but experienced a significant maximum drawdown of -27.67%. This suggests strong performance during bullish market conditions but vulnerability during downturns. Understanding past performance helps set realistic expectations, but it's crucial to remember that past results do not guarantee future outcomes. Investors should consider their ability to withstand potential losses and market volatility when assessing this portfolio's suitability for their financial goals.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 simulations, showing a 50th percentile potential return of 685.23%. Monte Carlo analysis uses historical data to model a range of possible future outcomes, acknowledging the unpredictability of markets. While these projections offer a glimpse into potential returns, they are not definitive. Investors should use this information to gauge risk and potential reward, keeping in mind that actual performance may vary due to unforeseen market conditions or economic events.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no exposure to other asset classes. This lack of diversification can lead to increased volatility and risk, as the portfolio is heavily reliant on the equity market's performance. Diversifying across asset classes, such as adding fixed income or alternative investments, can help mitigate risks and provide more stable returns. By introducing different asset classes, investors can potentially reduce the impact of market fluctuations and align the portfolio more closely with their risk tolerance and investment goals.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    11%
  • Financials
    11%
  • Telecommunications
    11%
  • Health Care
    9%
  • Consumer Staples
    6%
  • Industrials
    5%
  • Energy
    5%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation is heavily skewed towards technology, making up over 35% of the portfolio, followed by consumer cyclicals and financial services. This concentration means the portfolio's performance is closely tied to the success of these sectors. While technology has been a strong performer, overexposure can increase risk if the sector underperforms. Balancing sector exposure by incorporating more defensive sectors like healthcare or utilities can help stabilize returns and reduce reliance on any single sector's performance.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is predominantly invested in North American equities, with over 98% exposure, leaving minimal allocation to other regions. This geographic concentration increases vulnerability to regional economic downturns or policy changes. Diversifying geographically by including more exposure to European, Asian, or emerging markets can enhance the portfolio's resilience and provide access to different growth opportunities. A more balanced geographic allocation can reduce risk and help capture global market trends.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the allocation among existing assets to achieve the most efficient mix. By optimizing, investors can aim for higher returns without increasing risk, or maintain returns while reducing risk. It's important to note that optimization does not guarantee diversification or alignment with personal goals. Investors should consider their risk tolerance and objectives when making allocation changes.

Ongoing product costs Info

  • WisdomTree US Equity Income UCITS ETF - Acc 0.29%
  • Invesco EQQQ NASDAQ-100 UCITS ETF (GBP Hdg) 0.35%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.23%

The total expense ratio (TER) of the portfolio is 0.23%, which is relatively low and beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained by the investor. While the Vanguard S&P 500 ETF has the lowest cost at 0.07%, the Invesco EQQQ and WisdomTree ETFs are slightly higher. Investors should regularly review and compare costs to ensure they are getting the best value. Reducing costs can significantly impact long-term returns, especially in a low-return environment.

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