Growth-Oriented Portfolio with High Risk and Low Diversification Needs Better Sector and Geographic Balance

Report created on Dec 5, 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 primarily composed of ETFs and individual stocks. The majority of the investment, 60%, is in the Amundi S&P 500 ETF, providing broad exposure to the U.S. market. Another 20% is allocated to a thematic ETF focusing on Artificial Intelligence and Big Data. The remaining 20% is split equally between individual stocks of Alphabet Inc. and NVIDIA Corporation. This setup leans heavily towards technology and U.S.-based assets, with limited diversification in terms of both sectors and geography.

Growth Info

The historical performance of this portfolio is impressive, with a compound annual growth rate (CAGR) of 24.81%. However, it has experienced significant volatility, as indicated by a maximum drawdown of -33.08%. This suggests that while the portfolio has the potential for high returns, it also comes with substantial risk. The concentrated nature of the positions may result in high sensitivity to market swings, which could impact the long-term growth potential.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, suggests a wide range of potential returns for this portfolio. Based on 1,000 simulations, the portfolio could see returns as high as 14,109.49% or as low as 940.21%. This indicates a high level of uncertainty but also the potential for significant gains. The annualized return across all simulations stands at 42.49%, highlighting the potential for substantial growth if market conditions remain favorable.

Asset classes Info

  • Stocks
    100%

The portfolio is currently 100% invested in equities, which aligns with a growth-oriented investment strategy. While this can lead to higher returns, it also increases the portfolio's exposure to market volatility. Diversifying into other asset classes, such as bonds or real estate, could help mitigate risk and provide more stable returns. A balanced approach could enhance the portfolio's resilience during market downturns.

Sectors Info

  • Technology
    45%
  • Telecommunications
    18%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

The sector allocation is heavily skewed towards technology, which accounts for nearly 45% of the portfolio. This concentration can lead to higher returns during tech booms but also exposes the portfolio to sector-specific risks. Diversifying across more sectors, such as healthcare or consumer staples, could help balance the risk and provide more consistent performance. A broader sector allocation may also capture opportunities in other growing industries.

Regions Info

  • North America
    98%
  • Europe Developed
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 97.57% of assets allocated there. This lack of geographic diversification may leave the portfolio vulnerable to region-specific economic downturns or policy changes. Expanding the geographic allocation to include more exposure to Europe, Asia, or emerging markets could help spread risk and tap into growth opportunities outside North America.

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 has room for optimization, particularly in terms of diversification. Moving along the efficient frontier can help balance risk and return. For a riskier portfolio, increasing exposure to high-growth sectors or emerging markets may be considered. Conversely, for a more conservative approach, incorporating bonds or defensive sectors could reduce volatility. Focusing on achieving a better balance between risk and return will enhance the portfolio's overall performance.

Ongoing product costs Info

  • Amundi Index Solutions - Amundi S&P 500 UCITS ETF C EUR 0.15%
  • Xtrackers Artificial Intelligence &Big Data UCITS ETF 1C 0.35%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is relatively low at 0.16%, which is advantageous for maintaining returns. The low costs are primarily due to the ETFs, which have lower fees compared to actively managed funds. Keeping investment costs low is crucial for maximizing returns, as high fees can erode gains over time. Continuing to focus on cost-efficient investments will help optimize long-term performance.

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