High Growth Portfolio with Low Diversification and High Tech Exposure

Report created on Nov 14, 2024

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 of a mix of ETFs and common stocks, with a significant tilt towards technology and growth stocks. The Vanguard S&P 500 ETF and the SHP ETF Trust - NEOS S&P 500 High Income ETF make up a substantial portion of the portfolio, alongside individual stocks like NVIDIA, Tesla, and AMD. This composition indicates a strong focus on capital appreciation, with limited diversification across sectors and asset classes. To enhance stability and reduce risk, consider broadening the asset class and sector exposure in the portfolio.

Growth Info

Historically, the portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 39.46%. However, it has also experienced a maximum drawdown of -22.16%, indicating potential volatility. The returns are concentrated in a few days, which suggests that the portfolio's performance is driven by specific events or stocks. This high volatility can be risky, especially for investors with a lower risk tolerance. To stabilize returns, consider diversifying the portfolio to include more stable, income-generating assets.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The simulation shows a wide range of potential outcomes, with a median return of 5,689.89% and an annualized return of 44.5%. This suggests a high potential for growth but also significant uncertainty. The Monte Carlo simulation provides a probabilistic view of future returns, emphasizing the importance of diversification to manage risk. Consider rebalancing the portfolio to mitigate extreme outcomes and enhance the likelihood of achieving desired financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.74% in equities and a minimal allocation to cash. This concentration in a single asset class increases risk, particularly in volatile markets. While stocks offer growth potential, they also expose the portfolio to significant market fluctuations. To reduce risk and increase stability, consider incorporating other asset classes such as bonds or real estate, which can provide diversification benefits and potentially smoother returns over time.

Sectors Info

  • Technology
    48%
  • Consumer Discretionary
    21%
  • Financials
    11%
  • Health Care
    5%
  • Telecommunications
    4%
  • Industrials
    3%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio's sector allocation is heavily skewed towards technology, which accounts for 48.43% of the portfolio. While tech stocks have been strong performers, this high concentration increases sector-specific risk. Other sectors like consumer cyclicals and financial services are also represented, but to a lesser extent. To mitigate sector risk, consider diversifying into sectors that are less correlated with technology, providing a buffer against potential downturns in the tech industry.

Regions Info

  • North America
    100%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99.74% of assets allocated there. This lack of geographic diversification exposes the portfolio to region-specific risks, such as economic downturns or regulatory changes in North America. While North American markets have been robust, global diversification can offer exposure to growth opportunities in other regions. Consider increasing exposure to international markets to enhance diversification and reduce regional risk.

Redundant positions Info

  • SHP ETF Trust - NEOS S&P 500 High Income ETF
    Vanguard S&P 500 ETF
    High correlation

Within the portfolio, there are highly correlated assets, particularly between the SHP ETF Trust - NEOS S&P 500 High Income ETF and the Vanguard S&P 500 ETF. High correlations indicate that these assets tend to move in tandem, reducing the diversification benefits. This can lead to increased portfolio volatility. To improve diversification, consider including assets with lower correlations, which can help smooth out returns and reduce overall portfolio risk.

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 concept of the efficient frontier suggests that an optimal portfolio maximizes return for a given level of risk. This portfolio, with its high concentration in correlated assets, may not be on the efficient frontier. The overlapping assets reduce diversification benefits, potentially leading to higher risk without commensurate returns. To optimize, consider diversifying across uncorrelated assets and sectors. This could move the portfolio closer to the efficient frontier, reducing risk and potentially enhancing returns.

Dividends Info

  • SHP ETF Trust - NEOS S&P 500 High Income ETF 11.70%
  • The Toronto-Dominion Bank 4.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.08%

The portfolio's dividend yield is relatively modest at 2.08%, with contributions mainly from the SHP ETF Trust - NEOS S&P 500 High Income ETF and The Toronto-Dominion Bank. While dividends provide a steady income stream, the portfolio's focus on growth stocks limits its income potential. For investors seeking income, consider increasing exposure to dividend-paying stocks or funds, which can provide stability and cash flow, especially during market downturns.

Ongoing product costs Info

  • SHP ETF Trust - NEOS S&P 500 High Income ETF 0.68%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is low at 0.09%, primarily due to the Vanguard S&P 500 ETF's minimal fees. Low costs are beneficial as they enhance net returns over time. However, the SHP ETF Trust - NEOS S&P 500 High Income ETF has a higher fee of 0.68%, which could impact returns. Keeping investment costs low is crucial for long-term performance. Consider reviewing the cost structure of the portfolio regularly and exploring lower-cost alternatives if available.

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