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A speculative portfolio with high risk and limited diversification across sectors

Report created on Jan 6, 2025

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification
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Positions

The portfolio is heavily weighted towards common stocks, with a significant portion allocated to Checkpoint Therapeutics Inc. Funds such as the Fidelity Flex 500 Index Fund and Fidelity Flex International Index Fund provide some balance. Compared to common benchmarks, this portfolio skews heavily towards individual stock holdings. This composition reflects a speculative approach, focusing on high-risk, potentially high-reward investments. To reduce risk, consider increasing exposure to diversified funds or other asset classes.

Growth Info

With a CAGR of 4.39%, the portfolio's historic performance is modest, particularly given its speculative nature. A concerning max drawdown of -57.86% highlights significant volatility. For context, standard benchmarks often exhibit lower drawdowns. This suggests that while the portfolio has growth potential, it is prone to substantial losses. To enhance stability, consider rebalancing towards more stable, diversified assets that may offer consistent returns.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, show a bleak outlook with negative returns in most scenarios. This highlights the limitations of relying solely on past data, as it does not guarantee future results. The simulations suggest a high risk of capital loss. Exploring alternative asset allocations or rebalancing strategies could improve future projections and reduce downside risk.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly composed of stocks, with minimal allocation to other asset classes. This lack of diversity can increase vulnerability to market swings. In contrast, benchmark portfolios often include bonds and other asset classes to mitigate risk. Introducing a mix of asset classes, such as bonds or real estate, could enhance diversification and provide a buffer against stock market volatility.

Sectors Info

  • Health Care
    32%
  • Technology
    20%
  • Industrials
    16%
  • Basic Materials
    14%
  • Financials
    6%
  • Consumer Discretionary
    4%
  • Telecommunications
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio shows a strong concentration in healthcare and technology sectors, which can lead to higher volatility during market shifts. Compared to benchmarks, this concentration suggests an aggressive growth strategy. While these sectors offer growth potential, diversifying into other sectors could reduce risk and improve stability. Consider gradually reallocating funds to underrepresented sectors for better balance.

Regions Info

  • North America
    86%
  • Europe Developed
    8%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographic exposure is heavily tilted towards North America, with limited diversification internationally. This overexposure to one region can increase vulnerability to regional economic downturns. Benchmarks typically have more balanced geographic allocations. Expanding exposure to international markets could enhance diversification and reduce regional risk, potentially improving long-term performance.

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.

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The portfolio could be optimized using the Efficient Frontier, which illustrates the best possible risk-return ratio for a given level of risk. Current allocations may not fully exploit potential returns. Adjusting the asset mix to achieve a more efficient portfolio could significantly enhance expected returns without increasing risk. Consider consulting with a financial advisor for tailored optimization strategies.

Dividends Info

  • Fidelity Flex 500 Index Fund 0.90%
  • Fidelity Flex International Index Fund 2.80%
  • FIDELITY FLEX MID CAP INDEX FUND FIDELITY FLEX MID CAP INDEX FUND 0.30%
  • FIDELITY FLEX SMALL CAP INDEX FUND FIDELITY FLEX SMALL CAP INDEX FUND 0.30%
  • Weighted yield (per year) 0.52%

The portfolio's overall dividend yield is low, at 0.52%, with contributions mainly from index funds. Dividends can provide a steady income stream and cushion against market volatility. For investors seeking income, increasing exposure to higher-yielding assets could be beneficial. Consider adding dividend-focused funds or stocks to enhance the portfolio’s income potential.

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