A balanced portfolio with a focus on North American equities and moderate diversification

Report created on Dec 17, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio comprises a mix of ETFs and mutual funds, with significant allocations to ProShares Ultra QQQ and ProShares Ultra S&P500, each holding 20%. The remaining investments are spread across various ETFs and funds, with smaller allocations to gold, bonds, and managed futures. This structure indicates a balanced approach, aiming for growth while maintaining some defensive positions. The high allocation to leveraged ETFs suggests a pursuit of amplified returns, which can increase both potential gains and risks. To better manage risk, consider adjusting allocations to include more stable, income-generating assets.

Growth Info

Historically, the portfolio has demonstrated strong performance, with a compound annual growth rate (CAGR) of 18.09%. However, it also experienced a maximum drawdown of -22.48%, reflecting periods of significant volatility. This performance highlights the portfolio's potential for high returns but also underscores the risk of substantial losses during market downturns. Historical data can offer insights, but it's important to remember that past performance is not a guarantee of future results. To mitigate risk, consider rebalancing the portfolio to reduce exposure to high-volatility assets.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes by analyzing historical data. For this portfolio, simulations suggest an annualized return of 10.18%, with a 67th percentile projection of 312.69% growth. However, there's also a 5th percentile projection of a -12.3% decline, indicating potential downside risk. While these projections offer valuable insights, they rely on historical data and assumptions, which may not account for future market conditions. To enhance potential returns and manage risk, consider diversifying further across uncorrelated assets.

Asset classes Info

  • Cash
    68%
  • Stocks
    39%
  • Other
    12%

The portfolio's asset allocation includes cash, stocks, and other investments, with stocks making up nearly 40%. This allocation provides a solid foundation for growth but may expose the portfolio to equity market volatility. The presence of other asset classes, such as bonds and commodities, helps balance the risk and provide some income stability. However, the allocation to cash appears disproportionately high, which could limit growth potential. To optimize returns, consider reallocating some cash into assets with higher growth prospects or income potential.

Sectors Info

  • Technology
    20%
  • Telecommunications
    7%
  • Financials
    6%
  • Energy
    6%
  • Industrials
    6%
  • Health Care
    5%
  • Consumer Discretionary
    5%
  • Consumer Staples
    4%
  • Consumer Discretionary
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily weighted towards the technology sector, with a 19.57% allocation, followed by communication services and financial services. This concentration in tech stocks reflects a growth-oriented approach but also increases exposure to sector-specific risks. While technology has been a strong performer historically, it can be volatile. Diversifying across more sectors, such as healthcare or consumer staples, could help mitigate risk and provide more stable returns. Balancing sector exposure can lead to a more resilient portfolio in varying market conditions.

Regions Info

  • North America
    56%
  • Europe Developed
    5%
  • Japan
    3%

Geographic allocation is predominantly focused on North America, which constitutes 55.67% of the portfolio. This concentration leverages the strength of the U.S. market but may limit exposure to growth opportunities in other regions. The limited allocation to Europe, Asia, and emerging markets suggests an opportunity to enhance diversification. Expanding geographic exposure can reduce reliance on any single market and potentially capture gains from global economic growth. Consider increasing investments in international markets to achieve a more balanced global portfolio.

Redundant positions Info

  • ProShares Ultra QQQ
    ProShares Ultra S&P500
    High correlation

The portfolio contains highly correlated assets, particularly between ProShares Ultra QQQ and ProShares Ultra S&P500. This correlation means these assets tend to move in tandem, offering little diversification benefit. High correlation can amplify risk during market downturns, as losses in one asset could be mirrored in another. To improve risk management, consider replacing some correlated assets with those that have lower correlation, thereby enhancing diversification. This strategy can help stabilize portfolio performance across different market conditions.

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 optimization using the Efficient Frontier, which seeks the best risk-return ratio. By adjusting allocations within the current set of assets, it's possible to achieve a more efficient portfolio. This process involves balancing high-risk, high-return assets with more stable investments to improve overall performance. Optimization doesn't necessarily mean adding new assets; rather, it's about finding the right balance among existing ones. Consider using optimization tools to identify potential reallocation strategies that align with your risk tolerance and return objectives.

Dividends Info

  • Simplify Exchange Traded Funds 7.80%
  • iMGP DBi Managed Futures Strategy ETF 5.20%
  • FIDELITY ADVISOR FLOATING RATE HIGH INCOME FUND FIDELITY FLOATING RATE HIGH INCOME FUND 7.70%
  • iShares 7-10 Year Treasury Bond ETF 3.20%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 6.40%
  • ProShares Ultra QQQ 0.20%
  • AQR LONG-SHORT EQUITY FUND CLASS N 16.10%
  • ProShares Ultra S&P500 0.70%
  • iShares 20+ Year Treasury Bond ETF 3.80%
  • Weighted yield (per year) 5.10%

The portfolio has a total dividend yield of 5.1%, with notable contributions from the AQR Long-Short Equity Fund and Simplify Exchange Traded Funds. Dividends provide a steady income stream, which can be reinvested or used to meet cash flow needs. High dividend yields can enhance total returns, especially in low-growth environments. However, reliance on dividends from a few high-yielding assets could increase risk. To ensure consistent income, consider diversifying the sources of dividends across various sectors and asset classes.

Ongoing product costs Info

  • Simplify Exchange Traded Funds 0.78%
  • iMGP DBi Managed Futures Strategy ETF 0.85%
  • FIDELITY ADVISOR FLOATING RATE HIGH INCOME FUND FIDELITY FLOATING RATE HIGH INCOME FUND 0.75%
  • SPDR Gold MiniShares 0.10%
  • iShares 7-10 Year Treasury Bond ETF 0.15%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 0.21%
  • KFA Mount Lucas Index Strategy ETF 0.90%
  • ProShares Ultra QQQ 0.95%
  • AQR LONG-SHORT EQUITY FUND CLASS N 5.18%
  • ProShares Ultra S&P500 0.91%
  • iShares 20+ Year Treasury Bond ETF 0.15%
  • Weighted costs total (per year) 1.60%

The portfolio's total expense ratio (TER) stands at 1.6%, with some funds, like AQR Long-Short Equity Fund, having notably high costs. These expenses can erode returns over time, especially in a low-return environment. Lowering costs can improve long-term performance, as even small reductions in fees can lead to significant savings. Consider replacing high-cost funds with more cost-effective alternatives that offer similar exposure. Regularly reviewing and adjusting the portfolio's expense structure can help maximize net returns.

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