Growth-focused portfolio with high concentration in US equities and energy sector

Report created on Jan 3, 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 primarily composed of a Vanguard S&P 500 Index ETF, making up nearly 68% of the total allocation. This is complemented by two common stocks, Denison Mines Corp and Ur Energy Inc, collectively accounting for about 32%. Compared to typical balanced portfolios, this composition shows a heavy focus on US equities, particularly through the ETF. While this can offer strong growth potential, it may also expose the portfolio to higher volatility. Consider adding more diverse asset types to mitigate potential risks and enhance stability.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 19.15%, indicating strong growth over time. However, it has also experienced a significant maximum drawdown of -28.39%, suggesting periods of high volatility. When compared to a broad market benchmark, this performance is robust but highlights the potential for large fluctuations. Investors should be aware that past performance doesn't guarantee future results and consider strategies to cushion against future downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, predicts varied results for this portfolio. With a wide range of possible outcomes, from a 5th percentile loss of -83.3% to a 67th percentile gain of 743.79%, the projections reflect both high risk and high reward scenarios. While the median outcome suggests substantial growth, it's important to remember that these are estimations and not guarantees. Diversifying further may help stabilize future returns.

Asset classes Info

  • US Equity
    67%
  • Stocks
    32%

The portfolio's asset class allocation is heavily skewed towards US equity, accounting for over 67%, with the remainder in stocks. This limited diversification across asset classes increases exposure to market-specific risks. In contrast, a more balanced portfolio might include bonds or international equities to spread risk. To align with common benchmark norms, consider incorporating additional asset classes to achieve a more balanced risk-return profile.

Sectors Info

  • Energy
    35%
  • Technology
    22%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Telecommunications
    6%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    1%

Sector allocation shows a pronounced concentration in energy, which makes up over 34% of the portfolio. This is followed by technology and financial services. Such concentration can lead to increased volatility, especially if the energy sector faces downturns. Typically, balanced portfolios distribute investments more evenly across sectors to mitigate sector-specific risks. Evaluating the current sector weights and potentially redistributing towards less represented sectors could enhance resilience.

Regions Info

  • North America
    100%

Geographically, the portfolio is almost entirely invested in North America, with minimal exposure to Europe and Asia. This narrow focus limits the benefits of geographic diversification, which can help cushion against regional economic downturns. Common benchmarks often include a more global mix, balancing exposure across multiple regions. Expanding the geographic reach of investments could offer additional growth opportunities and risk mitigation.

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's current allocation could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return balance. This involves adjusting the weights of existing assets to achieve a more efficient portfolio. While this approach does not inherently improve diversification, it ensures that the current asset mix is maximized for risk-adjusted returns. Regularly reviewing the portfolio's efficiency can help maintain optimal performance.

Dividends Info

  • Vanguard S&P 500 Index ETF 0.50%
  • Weighted yield (per year) 0.34%

The portfolio has a modest dividend yield, with the Vanguard S&P 500 Index ETF contributing a 0.5% yield. While dividends are not the primary focus of this growth-oriented portfolio, they can provide a steady income stream. For investors seeking income alongside growth, exploring other dividend-paying assets might be beneficial. However, for purely growth-focused goals, the current yield may suffice.

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