A tech-focused growth portfolio with high risk and limited geographic diversification
Risk profile
- Secure Speculative
The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.
Diversification profile
- Focused Diversified
The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.
What type of investor this portfolio is suitable for
Growth Investors
This portfolio suits an investor with a high risk tolerance seeking aggressive growth over a long-term horizon. It prioritizes capital appreciation through concentrated investments in technology and large-cap stocks, making it ideal for those comfortable with market volatility. The focus on growth stocks and limited diversification suggests a willingness to accept short-term fluctuations for the potential of substantial long-term gains. This approach is best for investors aiming to build significant wealth over time.
Positions
-
Apple Inc
AAPL - US0378331005 20.70% -
Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 14.60% -
Alphabet Inc Class A
GOOGL - US02079K3059 12.50% -
Crowdstrike Holdings Inc
CRWD - US22788C1053 9.60% -
NVIDIA Corporation
NVDA - US67066G1040 9.60% -
Southwest Airlines Company
LUV - US8447411088 7.00% -
Amazon.com Inc
AMZN - US0231351067 5.20% -
Core Scientific Inc. Common Stock
CORZ 5.20% -
Coca-Cola Consolidated Inc.
COKE - US1910981026 5.00% -
DraftKings Inc
DKNG - US26142V1052 4.70% -
Chipotle Mexican Grill Inc
CMG - US1696561059 3.00% -
Uber Technologies Inc
UBER - US90353T1007 2.90%
This portfolio is heavily weighted towards individual stocks, with a significant concentration in technology giants like Apple and Alphabet. The inclusion of the Vanguard Total Stock Market ETF adds some diversification, but overall, the portfolio is not highly diversified. This composition aligns with an aggressive growth strategy, which can lead to higher returns but also increased volatility. To mitigate risks, consider adding more diversified asset classes, such as bonds or international equities, which can provide a buffer during market downturns.
The historical data covers less than 2 years, which reduces the confidence in the calculated values.
Growth
Historically, this portfolio has performed exceptionally well, boasting a Compound Annual Growth Rate (CAGR) of 30.64%. This impressive growth rate indicates strong past performance, driven by the high returns of tech stocks. However, it's crucial to remember that past performance does not guarantee future results. The portfolio's max drawdown of -19.43% highlights its vulnerability to market volatility. To reduce potential losses, consider rebalancing the portfolio to include more stable assets, which can provide a cushion during market downturns.
Due to limited historical data, this may show extreme values that are not realistic.
Projection
Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns for this portfolio. With an annualized return of 42.58% across simulations, the portfolio shows promise for future growth. However, the reliance on historical data means these projections are not foolproof. The simulations show a 5th percentile return of 107.2%, indicating a worst-case scenario where the portfolio still grows. To increase confidence in future performance, consider diversifying assets to reduce reliance on any single market or sector.
Asset classes
- Stocks 100%
- Cash 0%
The portfolio is entirely composed of stocks, which limits diversification and increases exposure to market volatility. While stocks offer high growth potential, they also come with higher risk. Including other asset classes, such as bonds or real estate, could provide stability and income, especially during periods of market turbulence. A balanced allocation across multiple asset classes can help smooth returns and reduce the impact of market fluctuations, aligning with long-term growth strategies.
Sectors
- Technology 50%
- Consumer Discretionary 14%
- Telecommunications 14%
- Industrials 8%
- Consumer Staples 6%
- Consumer Discretionary 3%
- Financials 2%
- Health Care 2%
- Energy 1%
- Real Estate 0%
- Utilities 0%
- Basic Materials 0%
With 50% of the portfolio in technology, there is a significant sector concentration. While tech stocks have driven impressive returns, they are also susceptible to volatility, especially during interest rate hikes or regulatory changes. The portfolio's exposure to consumer cyclicals and communication services provides some balance, but overall sector diversification is limited. To mitigate risk, consider increasing exposure to more defensive sectors like healthcare or consumer staples, which can provide stability during economic downturns.
Regions
- North America 100%
- Europe Developed 0%
- Asia Developed 0%
- Latin America 0%
- Asia Emerging 0%
- Africa/Middle East 0%
The portfolio is entirely concentrated in North America, which limits geographic diversification and exposes it to regional risks. While the U.S. market has performed well historically, relying solely on one region can increase vulnerability to local economic and political events. Expanding geographic exposure to include developed and emerging markets can enhance diversification and reduce regional risks. This approach can also capture growth opportunities in other parts of the world, potentially boosting long-term returns.
Market capitalization
- Mega-cap 54%
- Large-cap 37%
- Mid-cap 8%
- Small-cap 1%
- Micro-cap 0%
The portfolio is heavily weighted towards mega and big-cap stocks, which tend to be more stable but may offer lower growth potential compared to smaller companies. While large-cap stocks provide a solid foundation, incorporating more mid and small-cap stocks could enhance growth potential and diversification. Smaller companies often have more room for growth, albeit with higher volatility. A balanced allocation across different market capitalizations can optimize risk and return, aligning with the growth-oriented strategy.
Dividends
- Apple Inc 0.50%
- Coca-Cola Consolidated Inc. 0.50%
- Alphabet Inc Class A 0.50%
- Southwest Airlines Company 1.50%
- Vanguard Total Stock Market Index Fund ETF Shares 1.00%
- Weighted yield (per year) 0.44%
The portfolio's dividend yield is relatively low at 0.44%, reflecting its focus on growth stocks. While dividends provide a steady income stream, growth stocks typically reinvest earnings to fuel expansion. For investors seeking income, consider adding high-dividend stocks or dividend-focused ETFs. This can provide regular cash flow and reduce reliance on capital gains for returns. Balancing growth and income can enhance the portfolio's resilience, especially during periods of market volatility.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
The portfolio's costs are impressively low, particularly with the Vanguard ETF's expense ratio of 0.03%. Low costs are beneficial for long-term performance, as they allow more of the portfolio's returns to compound over time. However, it's essential to remain vigilant about other potential fees, such as trading costs or management fees, which can erode returns. Regularly reviewing and minimizing costs can contribute to better overall performance, aligning with the portfolio's growth objectives.
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.
The portfolio's current asset allocation could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. By adjusting the weightings of existing assets, the portfolio can achieve a more efficient balance, maximizing returns for a given level of risk. This approach focuses on optimizing the current holdings, rather than adding new assets, to improve overall performance. Regularly reviewing and rebalancing the portfolio can ensure it remains aligned with risk-return objectives.
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