Balanced Portfolio with High Technology Exposure and Low Geographic Diversification Needs Optimization

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits a growth-oriented investor with a moderate risk tolerance and a focus on long-term capital appreciation. Such an investor is comfortable with market fluctuations and seeks to capitalize on the growth potential of equities, particularly in the technology sector. The portfolio's high equity exposure and sector concentration align with an investor who can withstand volatility and is not reliant on immediate income. With a longer investment horizon, this investor aims to achieve substantial growth while being open to periodic adjustments for diversification and risk management.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    54.66%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    18.80%
  • iShares U.S. Technology ETF
    IYW - US4642877215
    12.50%
  • iShares Semiconductor ETF
    SOXX - US4642875235
    7.20%
  • Vanguard Small-Cap Value Index Fund ETF Shares
    VBR - US9229086114
    2.70%
  • Vanguard Value Index Fund ETF Shares
    VTV - US9229087443
    2.40%
  • Joby Aviation
    JOBY - KYG651631007
    0.90%
  • Roku Inc
    ROKU - US77543R1023
    0.40%
  • Robinhood Markets Inc
    HOOD - US7707001027
    0.21%
  • Arm Holdings plc
    ARM - US0420682058
    0.13%
  • Spirit Airlines Inc
    SAVE - US8485771021
    0.10%

The portfolio is heavily concentrated in ETFs, with a significant 54.66% allocation to the iShares Core S&P 500 ETF. This indicates a strong focus on large-cap U.S. equities. The remaining allocations are spread across various growth and technology-focused ETFs, with smaller positions in individual stocks. Such a composition suggests a preference for diversified market exposure through ETFs, while still maintaining some individual stock picks. This setup provides a good balance between broad market exposure and targeted growth opportunities, but it lacks diversification in terms of asset classes and geographies. Enhancing diversity could potentially reduce risk.

Warning Historical data is limited for this portfolio, which reduces the confidence in the calculated values.

Growth Info

Historically, the portfolio has performed exceptionally well, boasting a CAGR of 27.64%. However, it has experienced a maximum drawdown of -11.39%, indicating some vulnerability during market downturns. The concentrated exposure to high-growth sectors likely contributed to the impressive returns, but also increased volatility. The performance suggests that the portfolio has benefited from favorable market conditions for growth stocks. To sustain long-term performance, it might be prudent to consider diversifying into more stable sectors or asset classes that can provide a buffer during market corrections.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Using a Monte Carlo simulation, which projects potential future outcomes based on historical data, the portfolio shows a wide range of possible returns. With 1,000 simulations, the 5th percentile indicates a potential loss of -97.89%, while the 67th percentile suggests a gain of 173.72%. The median projected return is -4.17%, reflecting the inherent uncertainty in market conditions. While the simulation highlights the potential for significant gains, it also underscores the risk of substantial losses. To mitigate this risk, consider strategies to diversify and stabilize the portfolio's performance.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly concentrated in stocks, accounting for 99.77% of the asset allocation. This indicates a high-risk, high-reward investment approach, with minimal cash holdings for liquidity. While equities can offer substantial growth potential, they also expose the portfolio to market volatility. Balancing the portfolio with other asset classes, such as bonds or real estate, could provide stability and reduce overall risk. A more diversified asset allocation might help cushion against market downturns and provide a more consistent return profile over time.

Sectors Info

  • Technology
    47%
  • Financials
    10%
  • Telecommunications
    9%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

The sector allocation reveals a heavy tilt towards technology, comprising 46.56% of the portfolio. Other sectors like financial services, communication services, and consumer cyclicals have smaller representations. This concentration in technology reflects a growth-oriented strategy, which can be rewarding but also risky if the sector underperforms. To mitigate sector-specific risks, consider redistributing some investments into underrepresented sectors. This broader sector exposure could enhance diversification and potentially improve risk-adjusted returns, providing a more balanced growth trajectory.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, with 98.52% of assets allocated there. This lack of geographic diversification exposes the portfolio to regional economic and political risks. While the U.S. market has been a strong performer, expanding into other developed and emerging markets could provide additional growth opportunities and risk mitigation. By incorporating international equities, the portfolio can benefit from global economic trends and reduce reliance on a single market, enhancing overall resilience and potential returns.

Redundant positions Info

  • iShares U.S. Technology ETF
    iShares Core S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio features several highly correlated assets, particularly among technology and growth-focused ETFs. This correlation suggests that these assets tend to move in tandem, which can amplify portfolio volatility. While correlated assets can enhance returns in bullish markets, they can also exacerbate losses during downturns. To improve diversification, consider reducing exposure to overlapping assets and incorporating investments with lower correlations. This strategy can help manage risk and improve the portfolio's resilience to market fluctuations, providing a more stable investment experience.

Dividends Info

  • iShares Core S&P 500 ETF 1.20%
  • iShares U.S. Technology ETF 0.40%
  • Spirit Airlines Inc 200.00%
  • iShares Semiconductor ETF 0.70%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.80%
  • Vanguard Value Index Fund ETF Shares 2.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 1.15%

The overall dividend yield of the portfolio stands at 1.15%, with contributions from various ETFs and individual stocks. The iShares Core S&P 500 ETF provides a modest yield of 1.2%, while other ETFs contribute smaller amounts. Notably, Spirit Airlines Inc shows an unusually high yield, which may not be sustainable. The current dividend yield is relatively low, reflecting the growth-focused nature of the portfolio. For investors seeking income, it might be beneficial to explore higher-yielding investments or dividend-focused strategies to enhance cash flow and balance growth with income generation.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • iShares U.S. Technology ETF 0.40%
  • iShares Semiconductor ETF 0.35%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, which is quite low and indicates cost-effective management. The majority of the holdings are in ETFs with low expense ratios, such as the iShares Core S&P 500 ETF at 0.03%. Keeping investment costs low is crucial for maximizing net returns over time. This cost-efficiency is a positive aspect of the portfolio, allowing more capital to be allocated towards growth. While the current cost structure is favorable, it's important to regularly review and ensure that any new additions to the portfolio maintain this low-cost approach.

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.

The portfolio has room for optimization, particularly by addressing the high correlation among its assets. By reducing overlapping investments, the portfolio can achieve better diversification and potentially improve risk-adjusted returns. Moving along the efficient frontier, investors can explore options to either increase expected returns or decrease risk, depending on their objectives. For those seeking a riskier profile, increasing exposure to high-growth sectors may be suitable. Conversely, a more conservative approach would involve incorporating bonds or other low-volatility assets to stabilize the portfolio.

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