High-risk technology-focused portfolio with significant exposure to North American equities

Report created on Dec 9, 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 weighted towards ETFs, with a notable 40% in the Invesco NASDAQ 100 ETF and 20% in the Vanguard S&P 500 ETF. It also includes a 20% stake in MicroStrategy Incorporated, a common stock, and 20% in the iShares Semiconductor ETF. This composition suggests a strong focus on technology and large-cap U.S. equities. The reliance on ETFs offers some diversification benefits, but the high concentration in technology and specific stocks increases risk. To mitigate risk, consider diversifying into other asset classes or sectors.

Growth Info

Historically, this portfolio has shown impressive growth, with a compound annual growth rate (CAGR) of 39.67%. However, it also experienced a significant maximum drawdown of -61.16%, indicating high volatility. This performance suggests that while the portfolio can deliver substantial returns, it can also suffer large losses. Investors should be prepared for potential periods of significant underperformance. It is crucial to understand that past performance does not guarantee future results and should not be the sole basis for investment decisions.

Projection Info

Monte Carlo simulations, which use historical data to project potential future outcomes, show a wide range of possible returns for this portfolio. With a median projected return of 8,281.67% and 982 out of 1,000 simulations yielding positive returns, the outlook is optimistic but uncertain. The simulations suggest a high potential for gains but also highlight the possibility of significant fluctuations. Investors should remain cautious, as these projections rely on historical data, which may not account for future market changes or unforeseen events.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash. This high concentration in a single asset class increases exposure to market volatility and economic cycles. While stocks can offer growth potential, diversifying into other asset classes such as bonds or real estate could help reduce risk and provide more stability. Consider gradually reallocating a portion of the portfolio to include these asset classes for better risk management and potential income generation.

Sectors Info

  • Technology
    67%
  • Telecommunications
    8%
  • Consumer Discretionary
    8%
  • Health Care
    4%
  • Consumer Staples
    3%
  • Industrials
    3%
  • Financials
    3%
  • Utilities
    1%
  • Basic Materials
    1%
  • Energy
    1%
  • Real Estate
    1%

With 67.03% of the portfolio in the technology sector, there is a significant sectoral concentration. Other sectors, like communication services and consumer cyclicals, have minimal representation. This heavy focus on technology can lead to substantial gains during tech booms but also poses risks during downturns. To achieve a more balanced sectoral exposure, consider reallocating investments to include underrepresented sectors like healthcare, industrials, or financial services. This could help mitigate sector-specific risks and enhance overall portfolio resilience.

Regions Info

  • North America
    96%
  • Europe Developed
    2%
  • Asia Developed
    1%

The portfolio's geographic allocation is heavily skewed towards North America, with 96.26% exposure. This lack of international diversification can increase vulnerability to regional economic downturns or political events. Expanding geographic exposure to include more investments in Europe, Asia, or emerging markets could help spread risk and tap into growth opportunities abroad. Consider adding ETFs or mutual funds that focus on international markets to achieve a more balanced global allocation.

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 potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. By adjusting the weightings of current holdings, it may be possible to achieve a more favorable balance between risk and return. This process does not necessarily mean adding new assets but rather reallocating existing ones to improve efficiency. Consider consulting a financial advisor or using portfolio optimization tools to explore these opportunities further.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • iShares Semiconductor ETF 0.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.62%

The portfolio's dividend yield is relatively low at 0.62%, reflecting its focus on growth-oriented technology stocks. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. If income is a priority, consider reallocating some investments to high-dividend-paying sectors or dividend-focused ETFs. This shift could enhance cash flow while maintaining exposure to growth opportunities.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • iShares Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is relatively low and cost-effective. This means that the majority of returns are not eroded by fees. However, even small reductions in costs can lead to significant improvements over the long term. Regularly review the expense ratios of your holdings and consider switching to lower-cost alternatives if available. This could help maximize net returns and enhance overall portfolio performance.

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