Aggressive Portfolio with High Risk and Moderate Diversification Primarily Focused on Technology and North American Assets

Report created on Dec 3, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of a mix of ETFs and individual stocks, with a dominant focus on equities, making up over 95% of the allocation. The Vanguard S&P 500 ETF holds the largest position, followed by individual stocks like Amazon and Alphabet. This composition indicates a strong bias towards growth potential and capital appreciation. However, the lack of significant bond or cash holdings suggests limited downside protection. Balancing this aggressive stance with some fixed-income investments could provide stability without sacrificing long-term growth prospects.

Growth Info

Historically, the portfolio has shown impressive returns with a compound annual growth rate (CAGR) of 24.47%. This indicates robust performance, likely driven by the tech-heavy allocation and strong market conditions for growth stocks. However, the maximum drawdown of -44.69% highlights the potential volatility and risk associated with such a portfolio. While the returns are attractive, investors should be prepared for significant fluctuations. To mitigate risk, consider diversifying further into sectors with less correlation to technology and consumer cyclicals.

Projection Info

Using a Monte Carlo simulation, which models potential future performance based on historical data, the portfolio shows a wide range of potential outcomes. With a hypothetical initial investment, the median projection suggests significant growth, with a 50th percentile return of 1,085.45%. However, the 5th percentile indicates a risk of modest gains at 5.46%. These projections underscore the portfolio's aggressive nature, with high potential returns but also considerable risk. It may be beneficial to explore strategies that balance risk and reward more effectively.

Asset classes Info

  • Stocks
    96%
  • Cash
    4%

The portfolio's asset class allocation is heavily skewed towards stocks, comprising over 95% of the total. This reflects an aggressive investment strategy focused on growth. While this can lead to substantial returns, it also increases exposure to market volatility. A more balanced approach might include a higher allocation to bonds or other asset classes to provide a hedge against downturns. This could help smooth out returns and reduce overall portfolio risk, aligning with a more moderate risk tolerance.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    21%
  • Telecommunications
    12%
  • Financials
    7%
  • Industrials
    7%
  • Health Care
    6%
  • Energy
    5%
  • Utilities
    4%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Real Estate
    1%

Sector allocation reveals a significant concentration in technology, accounting for over 32% of the portfolio. Consumer cyclicals and communication services also represent substantial portions. This concentration in a few high-growth sectors can drive returns but also heightens risk if these sectors underperform. Diversifying into other sectors like healthcare or financial services could provide more stability and reduce sector-specific risk. A broader sector allocation would enhance the portfolio's resilience against market fluctuations in any single industry.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    1%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North American assets, which make up nearly 90% of the allocation. This focus on the U.S. market provides exposure to a strong and stable economy but limits diversification benefits from international markets. Expanding geographic exposure could capture growth opportunities in emerging markets or developed regions outside North America. This would not only enhance diversification but also mitigate risks associated with economic or political events in a single region.

Redundant positions Info

  • ProShares UltraPro S&P500
    Vanguard S&P 500 ETF
    High correlation

The portfolio shows high correlation among certain assets, particularly between ProShares UltraPro S&P500 and Vanguard S&P 500 ETF. Such overlap can diminish diversification benefits, as correlated assets tend to move in tandem. Reducing these overlapping positions could enhance portfolio diversification and lower overall risk. Consider replacing highly correlated assets with those having low or negative correlations to achieve a more balanced risk-return profile. This strategy would help in managing volatility and improving the portfolio's resilience.

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.

Before optimizing the portfolio, focus on reducing overlapping assets that don't contribute to diversification. This portfolio could be optimized along the efficient frontier by adjusting the balance between risk and return. To achieve a riskier profile, increase exposure to high-growth sectors, while a more conservative approach would involve adding fixed-income securities. However, addressing asset overlap should be the first step to ensure a truly diversified portfolio. Once resolved, fine-tuning the risk-return balance can further optimize performance.

Dividends Info

  • Apple Inc 0.40%
  • Global X Robotics & Artificial Intelligence ETF 0.10%
  • First Trust NASDAQ Cybersecurity ETF 0.40%
  • Alphabet Inc Class A 0.20%
  • VanEck Uranium+Nuclear Energy ETF 3.50%
  • ProShares UltraPro QQQ 1.20%
  • ProShares UltraPro S&P500 0.70%
  • Vanguard U.S. Momentum Factor 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Extended Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.02%

The portfolio's dividend yield is relatively low, at 1.02%, reflecting its focus on growth stocks rather than income-generating assets. This is typical for an aggressive portfolio, prioritizing capital appreciation over regular income. Investors seeking income might consider increasing exposure to dividend-paying stocks or funds. This could provide a steady cash flow and reduce reliance on capital gains for returns. Balancing growth with income can offer a more diversified approach to achieving financial goals.

Ongoing product costs Info

  • Global X Robotics & Artificial Intelligence ETF 0.68%
  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • VanEck Uranium+Nuclear Energy ETF 0.61%
  • First Trust Cloud Computing ETF 0.60%
  • ProShares UltraPro QQQ 0.88%
  • ProShares UltraPro S&P500 0.92%
  • Vanguard U.S. Momentum Factor 0.13%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.18%

Portfolio costs vary across holdings, with expense ratios ranging from 0.03% to 0.92%. The overall Total Expense Ratio (TER) is 0.18%, which is relatively low, indicating a cost-effective investment strategy. However, higher-cost ETFs like ProShares UltraPro QQQ and ProShares UltraPro S&P500 could be reviewed for cost efficiency. Reducing expenses by opting for lower-cost alternatives can enhance net returns over time. Keeping investment costs in check is crucial for maximizing long-term portfolio performance and achieving financial objectives.

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