A high-risk aggressive portfolio with a strong technology focus and limited diversification

Report created on Dec 20, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is heavily weighted towards ETFs, with a significant portion in technology-focused funds like the Vanguard S&P 500 Growth Index Fund ETF Shares and the GraniteShares 1.5x Long NVDA Daily ETF. Common stock is also represented by One Stop Systems Inc. The allocation leans heavily towards equities, with a small fraction in cash and bonds. Compared to a typical balanced portfolio, this composition is skewed towards growth, reflecting a high-risk, high-reward strategy. For broader diversification, consider incorporating other asset classes like bonds or real estate to balance the portfolio's risk.

Growth Info

The historic performance of this portfolio is impressive, with a CAGR of 67.08%. However, it has experienced a significant max drawdown of -45.59%, indicating high volatility. This performance surpasses typical market benchmarks, suggesting potential for substantial gains but also increased risk of loss. Historical data provides a snapshot of past trends but doesn't guarantee future performance. To mitigate potential downturns, consider strategies that reduce volatility, such as diversifying into less correlated assets.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median return of 35,431.53% and a 5th percentile return of 815.51%. This indicates a high degree of uncertainty, typical for aggressive portfolios. Monte Carlo simulations use historical data to project future outcomes, but they are not predictive. The high variability underscores the importance of regularly reviewing and adjusting the portfolio to align with changing market conditions and personal risk tolerance.

Asset classes Info

  • Stocks
    90%
  • Cash
    10%

The portfolio is predominantly allocated to stocks, with nearly 90% in equity and minimal exposure to bonds and cash. This concentration in stocks reflects an aggressive investment strategy, which can lead to significant growth but also increases exposure to market volatility. Compared to a more balanced portfolio, this asset allocation lacks the stabilizing effect of fixed-income investments. To enhance stability, consider increasing the allocation to bonds or other fixed-income assets, which can provide a buffer during market downturns.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Financials
    5%
  • Health Care
    5%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Technology dominates the sector allocation, comprising over 40% of the portfolio. Other sectors like consumer cyclicals and financial services have minimal representation. This heavy concentration in tech can lead to higher returns during industry booms but also exposes the portfolio to sector-specific risks, such as regulatory changes or market saturation. To mitigate these risks, consider diversifying into underrepresented sectors, which can provide balance and reduce reliance on a single industry for returns.

Regions Info

  • North America
    72%

The portfolio is heavily concentrated in North American assets, with over 72% exposure, and negligible investments in Europe and Asia. This geographical bias limits diversification and increases vulnerability to regional economic downturns. A more geographically balanced portfolio can reduce risk by spreading investments across different markets, which may perform differently under various economic conditions. Consider adding international equities to capture growth opportunities in emerging markets and reduce regional dependency.

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's current allocation can be optimized using the Efficient Frontier, which suggests the best possible risk-return ratio based on existing assets. This optimization doesn't necessarily mean adding new assets but adjusting current allocations to maximize efficiency. By realigning the asset weights, the portfolio can achieve a more favorable balance between risk and return. Consider using tools or consulting with a financial advisor to explore potential adjustments that align with your risk tolerance and investment goals.

Dividends Info

  • GraniteShares 1.5x Long NVDA Daily ETF 2.60%
  • SPDR S&P 500 ETF Trust 0.90%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • Vanguard S&P 500 Value Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 1.02%

The portfolio's dividend yield is relatively modest at 1.02%, with the highest yield from the GraniteShares 1.5x Long NVDA Daily ETF at 2.6%. While dividends can provide a steady income stream, this portfolio is primarily growth-focused, with less emphasis on income generation. For investors seeking regular income, increasing exposure to high-dividend-paying assets could be beneficial. However, for those prioritizing capital appreciation, the current yield is aligned with the aggressive growth strategy.

Ongoing product costs Info

  • GraniteShares 1.5x Long NVDA Daily ETF 1.15%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 Value Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.37%

The total expense ratio (TER) of this portfolio is 0.37%, which is reasonable, especially given the inclusion of leveraged ETFs. Lower costs contribute positively to long-term returns by reducing the drag on performance. However, the GraniteShares 1.5x Long NVDA Daily ETF has a higher expense ratio of 1.15%, which could impact net returns. Regularly reviewing and potentially replacing high-cost funds with lower-cost alternatives can help optimize the portfolio's efficiency and enhance net returns over time.

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