This portfolio has only about 1.4 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.
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High-Growth Broadly Diversified Portfolio with Strong Performance and Correlation Challenges

Report created on Jul 5, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed entirely of ETFs, with a significant emphasis on the Vanguard S&P 500 ETF, which makes up 50% of the holdings. Other notable positions include ProShares UltraPro QQQ at 20%, and the remaining three ETFs each holding a 10% stake. The portfolio is classified as broadly diversified, indicating a wide spread across various asset classes and sectors. However, it's heavily weighted towards equities, which suggests a higher risk profile. This composition aligns with a growth-oriented strategy, aiming for capital appreciation over time rather than income generation.

Growth Info

Historically, the portfolio has performed exceptionally well, with a compound annual growth rate (CAGR) of 29.52%. This impressive return is accompanied by a maximum drawdown of -16.23%, showing that while the portfolio can generate substantial gains, it can also experience significant volatility. The returns are concentrated, with 90% of them occurring over just 13 days, highlighting the importance of market timing. Such a performance suggests a strong growth trajectory, yet it's crucial to consider the potential for future volatility when planning long-term investments.

Projection Info

Using a Monte Carlo simulation, which generates a range of possible outcomes based on historical data, the portfolio shows promising future potential. With 1,000 simulations, the median outcome suggests a potential growth of 3,027.5% from a hypothetical initial investment. This simulation indicates a strong likelihood of positive returns, with all simulations resulting in gains. The annualized return across all simulations is 31.39%. While these projections are optimistic, it's important to remember that they are based on past performance and market conditions can change.

Asset classes Info

  • Stocks
    92%
  • Cash
    7%
  • Bonds
    1%

The portfolio's asset class allocation is heavily skewed towards stocks, comprising over 92% of the holdings. This high equity exposure aligns with a growth-focused investment strategy, aiming for capital appreciation. A small portion is allocated to cash, providing some liquidity, but bonds and other asset classes are minimally represented. This allocation suggests a higher risk tolerance, as equities tend to be more volatile compared to bonds. To potentially reduce risk, consider diversifying further into bonds or other less volatile asset classes.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is dominated by technology, which accounts for over 31% of the investments. Other significant sectors include financial services, consumer cyclicals, and communication services. This concentration in technology reflects a bet on continued growth in this sector, but it also increases exposure to sector-specific risks. A more balanced sector allocation could help mitigate these risks, providing stability during periods of sector volatility. Consider reviewing the sector weights to ensure alignment with long-term investment goals.

Regions Info

  • North America
    83%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with over 83% of assets allocated there. This focus reflects confidence in the US market but also exposes the portfolio to regional risks. While there is some international exposure, it's relatively limited, with only small allocations to Europe, Asia, and other regions. A more geographically diversified portfolio could reduce vulnerability to region-specific economic downturns. Consider increasing exposure to international markets to enhance diversification and potentially capture growth opportunities abroad.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total World Stock Index Fund ETF Shares
    ProShares UltraPro QQQ
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation

The portfolio exhibits high correlations among its assets, particularly between the Vanguard S&P 500 ETF, Vanguard Total World Stock Index Fund ETF Shares, ProShares UltraPro QQQ, and Vanguard Total International Stock Index Fund ETF Shares. This implies that these assets tend to move in the same direction, reducing the diversification benefits. High correlation can increase portfolio volatility during market downturns. To enhance diversification, consider including assets with lower correlations, potentially reducing overall portfolio risk and increasing stability.

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.

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The portfolio optimization chart suggests that there is room for improvement by addressing the high correlation between assets. Before optimizing for risk or return, focus on reducing overlapping positions that do not add diversification benefits. Moving along the efficient frontier can help achieve a more risk-adjusted portfolio. To make the portfolio riskier, consider increasing allocation to equities with higher potential returns. Conversely, for a more conservative approach, increase exposure to bonds or other stable asset classes. Align portfolio adjustments with personal risk tolerance and financial goals.

Dividends Info

  • Avantis ALL Equity Markets Value ETF 2.00%
  • ProShares UltraPro QQQ 1.20%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.52%

The portfolio's dividend yield stands at 1.52%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. This yield is relatively modest, reflecting the portfolio's focus on growth rather than income generation. While dividends provide a steady income stream, the current yield may not be sufficient for those seeking regular income. If income generation is a goal, consider reallocating some assets to higher-yielding investments or dividend-focused funds to enhance the portfolio's income potential.

Ongoing product costs Info

  • Avantis ALL Equity Markets Value ETF 0.26%
  • ProShares UltraPro QQQ 0.88%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.23%

The total expense ratio (TER) of the portfolio is 0.23%, which is relatively low, reflecting the cost-efficiency of using ETFs. The Vanguard S&P 500 ETF has the lowest cost at 0.03%, while the ProShares UltraPro QQQ is the most expensive at 0.88%. Keeping costs low is crucial for maximizing net returns over time. While the current costs are competitive, it's important to regularly review and compare expense ratios to ensure cost-effectiveness. Consider reallocating from higher-cost to lower-cost funds if they align with investment goals.

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