Aggressive Technology-Heavy Portfolio with High Risk and Impressive Growth Potential but Limited Geographic Diversification

Report created on Dec 4, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily concentrated in technology stocks, with NVIDIA Corporation making up a whopping 36% of the total allocation. The portfolio is moderately diversified, with a total of 12 different stocks spread across six sectors. The overwhelming focus on technology suggests a high-risk, high-reward strategy, given the sector's potential for volatility. While this concentration can lead to significant gains during tech booms, it also exposes the portfolio to downturns in the sector. To mitigate risk, consider diversifying further into other sectors.

Growth Info

Historically, this portfolio has delivered an impressive compound annual growth rate (CAGR) of 49.52%, showcasing its potential for high returns. However, it has also experienced a maximum drawdown of -57.67%, indicating substantial volatility. The days that make up 90% of returns are relatively few, suggesting that the portfolio's performance is driven by short bursts of significant gains. This pattern is typical for aggressive portfolios, which can yield high returns but come with considerable risk. To maintain performance, consider strategies to manage drawdowns and volatility.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential future outcomes. This simulation, which uses random sampling to project returns, indicates a 5th percentile return of 530.19% and a median return of 10,988.5%. The annualized return across all simulations is 53.06%, reflecting the portfolio's aggressive nature. While the potential for high returns is evident, there is also a risk of significant losses. To prepare for various outcomes, consider setting aside a portion of investments in less volatile assets.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of common stocks, with no allocation to bonds or other asset classes. This lack of diversification across asset classes increases the portfolio's risk profile, as it is fully exposed to equity market fluctuations. While stocks offer the potential for high returns, they also come with higher volatility compared to bonds or cash. To balance risk and return, consider introducing other asset classes, such as bonds, to provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    54%
  • Telecommunications
    25%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Utilities
    2%

The sector allocation is heavily skewed towards technology, which comprises 54% of the portfolio. Other sectors like communication services and consumer cyclicals have smaller allocations. This concentration in technology can lead to significant gains during periods of sector growth but also exposes the portfolio to sector-specific risks. Diversifying across a broader range of sectors can help mitigate these risks and provide a more balanced approach to growth. Consider evaluating other sectors that align with long-term investment goals.

Regions Info

  • North America
    93%
  • Europe Developed
    4%
  • Asia Emerging
    3%

Geographically, the portfolio is predominantly focused on North American stocks, making up 93% of the total allocation. This concentration in a single region limits exposure to international markets and their potential growth opportunities. While the U.S. market is robust, geographic diversification can help reduce risk and capture growth in other regions. To enhance diversification, consider including stocks from other developed and emerging markets, which can offer different growth dynamics and risk profiles.

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 be optimized by considering the efficient frontier, which shows the best possible return for a given level of risk. Moving towards a more conservative allocation may involve increasing exposure to bonds or dividend-paying stocks, which can lower risk while providing stable returns. Conversely, those seeking higher returns might focus on maintaining or increasing exposure to high-growth sectors. However, before making changes, assess whether the current risk and return profile aligns with long-term goals and risk tolerance.

Dividends Info

  • ASML Holding NV 0.90%
  • Broadcom Inc 1.30%
  • Costco Wholesale Corp 2.00%
  • Alphabet Inc Class A 0.20%
  • Eli Lilly and Company 0.50%
  • Meta Platforms Inc. 0.20%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vistra Energy Corp 0.60%
  • Weighted yield (per year) 0.30%

The portfolio's dividend yield is quite low, with a total yield of just 0.3%. This reflects the focus on growth stocks, which typically reinvest profits rather than pay dividends. While growth stocks can lead to substantial capital appreciation, the lack of dividends means investors won't benefit from regular income. For those seeking income, consider adding dividend-paying stocks or funds to the portfolio. This can provide a steady income stream and help balance the focus on capital gains.

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