High-Risk Speculative Portfolio with Strong Tech Focus and Limited Diversification Opportunities

Report created on Dec 3, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted in ETFs, with ProShares UltraPro QQQ making up the largest portion at 43.51%. Vanguard S&P 500 ETF follows with 26.84%, while VanEck Semiconductor ETF and ProShares UltraPro S&P500 have smaller allocations. Costco Wholesale Corp is the only individual stock, comprising 9.61%. This setup reflects a speculative and concentrated strategy, primarily focused on large-cap U.S. equities. Such concentration might limit exposure to other growth opportunities, suggesting a need for diversification to mitigate risks and enhance returns.

Growth Info

Historically, the portfolio has shown impressive growth, with a CAGR of 34.92%. However, this comes with significant volatility, evidenced by a max drawdown of -70.94%. The returns are highly dependent on a few trading days, which can be risky. The high returns are appealing, but the potential for large losses could be concerning. To stabilize performance, it might be worth considering a more balanced approach, reducing reliance on high-risk assets and adding more stable investments.

Projection Info

Monte Carlo simulations indicate a wide range of potential outcomes, with an annualized return of 35.24%. The 5th percentile shows a modest gain, while the 50th and 67th percentiles suggest substantial growth. This highlights the portfolio's high-risk, high-reward nature. Monte Carlo simulations use random sampling to predict future performance, providing a range of possible outcomes. To achieve more consistent results, consider rebalancing to include assets with varying risk levels, which could help manage potential volatility.

Asset classes Info

  • Stocks
    82%
  • Cash
    16%
  • Bonds
    2%
  • Other
    1%

The portfolio is predominantly composed of stocks, accounting for 81.62%, while cash and bonds make up a minor portion. This stock-heavy allocation aligns with a high-risk strategy, aiming for growth rather than income. However, the lack of bonds or other fixed-income assets may expose the portfolio to market swings. Introducing more bonds or cash could provide stability and reduce overall risk, aligning with a more balanced investment strategy that cushions against market volatility.

Sectors Info

  • Technology
    45%
  • Consumer Staples
    14%
  • Telecommunications
    10%
  • Consumer Discretionary
    10%
  • Health Care
    6%
  • Financials
    5%
  • Industrials
    4%
  • Utilities
    1%
  • Energy
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, making up 45.45% of the allocation. Consumer defensive and communication services also have significant portions. This sector concentration could lead to increased volatility, especially if the tech sector underperforms. While tech has been a strong performer, diversification across more sectors could reduce risk. Consider spreading investments across various industries to balance exposure and protect against sector-specific downturns.

Regions Info

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

Geographically, the portfolio is overwhelmingly focused on North America, with 96.46% allocation. This regional concentration may overlook opportunities in other markets, which could provide diversification benefits. While North American markets have been strong, exposure to international markets might offer growth potential and help mitigate regional risks. Expanding the geographic reach could enhance the portfolio's resilience against local economic fluctuations, fostering a more robust investment strategy.

Redundant positions Info

  • ProShares UltraPro S&P500
    Vanguard S&P 500 ETF
    High correlation

The portfolio shows high correlation among certain assets, particularly between ProShares UltraPro S&P500 and Vanguard S&P 500 ETF. This correlation suggests limited diversification benefits, as these assets tend to move in the same direction. Reducing such overlap could enhance portfolio diversification, spreading risk across a broader range of assets. By introducing assets with lower correlation, the portfolio could achieve more stable returns and reduce susceptibility to market volatility.

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 benefit from optimization by reducing overlapping assets that offer no diversification advantages. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. By diversifying into uncorrelated assets, the portfolio can potentially achieve higher returns for a given level of risk or lower risk for a given level of return. Prioritizing diversification and reducing reliance on highly correlated assets should be the focus before further optimization.

Dividends Info

  • Costco Wholesale Corp 2.00%
  • VanEck Semiconductor ETF 0.40%
  • ProShares UltraPro QQQ 1.20%
  • ProShares UltraPro S&P500 0.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.14%

The portfolio's dividend yield stands at 1.14%, with Costco Wholesale Corp contributing the highest yield at 2.0%. While dividends provide a steady income stream, the overall yield is modest. This reflects a focus on growth rather than income generation. For those seeking higher income, increasing exposure to dividend-paying assets might be beneficial. Balancing growth and income can provide more consistent returns, catering to investors looking for both capital appreciation and regular income.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • ProShares UltraPro QQQ 0.88%
  • ProShares UltraPro S&P500 0.92%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.51%

The total expense ratio of the portfolio is 0.51%, with ProShares UltraPro ETFs having higher costs compared to Vanguard's low-cost option. Managing costs is crucial, as high fees can erode returns over time. Opting for lower-cost alternatives where possible could improve net returns. Keeping an eye on expense ratios and seeking cost-effective investments can help maintain portfolio efficiency, ensuring more of your investment goes towards growth rather than fees.

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