A growth-focused portfolio heavily concentrated in technology with low geographic diversification

Report created on Jan 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is composed mainly of ETFs, with significant allocations to Vanguard Total Stock Market Index Fund ETF Shares (33.93%), Invesco QQQ Trust (30.36%), and Vanguard S&P 500 ETF (19.64%). This structure shows a strong emphasis on broad U.S. equity exposure. Compared to typical benchmarks, this portfolio has a higher concentration in a few ETFs, suggesting a focus on growth and U.S. market trends. To enhance diversification, consider incorporating different asset classes or more varied ETFs to balance market exposure.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.29%, with a maximum drawdown of -28.81%. This indicates strong performance but also highlights significant volatility. While past performance is impressive, it's important to remember that it doesn't guarantee future results. To manage risk, consider strategies that mitigate drawdowns, such as diversifying into less volatile assets or employing hedging techniques during market downturns.

Projection Info

Utilizing Monte Carlo simulations, which use historical data to project potential outcomes, the portfolio shows promising forward projections. The median (50th percentile) scenario suggests a 541.21% return, while the 5th percentile projects a 111.79% return. However, it's crucial to understand that these simulations are based on historical trends and are not predictions. To better prepare for future uncertainties, consider stress-testing the portfolio against various economic scenarios.

Asset classes Info

  • Stocks
    99%

The portfolio is overwhelmingly invested in stocks, at 99.34%, with negligible allocations to cash and other asset classes. This heavy stock concentration can lead to higher volatility, especially during market downturns. Compared to diversified benchmarks, this allocation lacks balance. To improve risk management, consider adding fixed income or alternative investments, which can provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    39%
  • Consumer Discretionary
    12%
  • Telecommunications
    12%
  • Health Care
    9%
  • Financials
    8%
  • Industrials
    6%
  • Consumer Staples
    6%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The sector allocation is heavily skewed towards technology, which makes up 39.50% of the portfolio. Other sectors like consumer cyclicals and communication services have notable but smaller allocations. This tech-heavy focus can lead to increased volatility, especially during interest rate hikes or tech sector downturns. To reduce sector-specific risk, consider diversifying into sectors like healthcare or utilities, which may offer more stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 98.66% exposure. This limited geographic diversification could increase vulnerability to regional economic downturns. Compared to global benchmarks, there's a notable underexposure to international markets. To enhance geographic diversification, consider increasing allocations to regions like Europe or Asia, which may provide growth opportunities and risk mitigation.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Invesco QQQ Trust
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly between Invesco NASDAQ 100 ETF and Invesco QQQ Trust, as well as Vanguard Total Stock Market Index Fund ETF Shares and Vanguard S&P 500 ETF. High correlation means these assets tend to move together, which can limit diversification benefits. To improve risk management, consider removing or reducing overlapping assets and introducing investments with lower correlations.

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 current portfolio could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. However, before optimizing, focus on reducing highly correlated assets that do not offer diversification benefits. This optimization doesn't necessarily improve diversification but aims to achieve the best returns for a given level of risk using the existing assets.

Dividends Info

  • JPMorgan Equity Premium Income ETF 7.30%
  • Invesco QQQ Trust 0.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.19%

The portfolio's overall dividend yield is 1.19%, with the JPMorgan Equity Premium Income ETF offering a notable yield of 7.3%. While dividends can provide a steady income stream, the portfolio's yield is relatively low due to its focus on growth-oriented ETFs. Investors seeking income may want to explore higher-yielding assets or funds specifically designed for income generation to complement the growth focus.

Ongoing product costs Info

  • JPMorgan Equity Premium Income ETF 0.35%
  • Invesco QQQ Trust 0.20%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.11%

The portfolio's Total Expense Ratio (TER) is 0.11%, which is impressively low and supports long-term performance by minimizing costs. The Vanguard ETFs, in particular, contribute to this cost efficiency. Keeping costs low is crucial for enhancing net returns over time. Continue to monitor expense ratios and consider replacing any higher-cost funds with lower-cost alternatives to maintain this advantage.

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