High Risk Highly Diversified Portfolio with Strong International and Emerging Market Exposure

Report created on Dec 6, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is a well-rounded mix of 17 different positions, predominantly in ETFs, with a notable 22% allocation in Avantis® U.S. Small Cap Value ETF. It includes a mix of asset classes, with a significant 84.57% in stocks, 12.05% in bonds, and a small cash allocation. This composition suggests a strong focus on equity, which typically offers higher growth potential but also comes with higher volatility. With a high diversification score of 5 out of 5, the portfolio is spread across various sectors and geographies, reducing individual asset risk but maintaining a high overall risk profile.

Growth Info

Historically, the portfolio shows extreme volatility, with an astronomical CAGR of 81,435.81% and a max drawdown of -99.35%. This indicates that while the portfolio has the potential for incredible gains, it also bears the risk of significant losses. The concentrated days that make up 90% of returns highlight the speculative nature of the investments. This kind of performance is typical of high-risk portfolios with leveraged and volatile assets, suggesting the need for careful monitoring and potential rebalancing to manage risks effectively.

Projection Info

Using a Monte Carlo simulation, which models potential future performance by simulating random variables, the portfolio's future returns remain uncertain, with key percentiles showing nan%. This highlights the unpredictability of outcomes with such a speculative portfolio. Of the 1,000 simulations, 512 show positive returns, indicating a slightly better than even chance for gains. The lack of clear projections suggests that while the portfolio could perform well, it also carries a significant risk of underperforming, emphasizing the importance of aligning the portfolio with personal risk tolerance and goals.

Asset classes Info

  • Stocks
    85%
  • Bonds
    12%
  • Cash
    3%
  • Other
    1%

The portfolio is heavily weighted towards stocks at 84.57%, with a smaller allocation in bonds at 12.05%. This asset class distribution leans toward growth, offering potential for high returns but also higher risk. The minimal allocation in cash and other assets suggests limited liquidity and diversification. For investors seeking to balance risk and return, a more diversified allocation across asset classes, including a larger bond or cash component, could provide stability and reduce volatility, especially during market downturns.

Sectors Info

  • Technology
    16%
  • Financials
    16%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Consumer Staples
    7%
  • Energy
    6%
  • Basic Materials
    5%
  • Health Care
    5%
  • Telecommunications
    4%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is diversified across multiple sectors, with significant allocations in Technology (16.17%), Financial Services (15.52%), and Consumer Cyclicals (13.07%). This broad sector allocation can help mitigate sector-specific risks, but the high concentration in volatile sectors like Technology could increase overall portfolio risk. To optimize sector exposure, consider balancing allocations across more stable sectors like Consumer Defensive or Utilities, which could provide a buffer against market fluctuations and offer more consistent returns.

Regions Info

  • North America
    57%
  • Europe Developed
    9%
  • Asia Emerging
    7%
  • Asia Developed
    4%
  • Japan
    4%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly invested in North America (57.27%), with additional exposure to developed and emerging markets. This provides a mix of stability from developed regions and growth potential from emerging markets. However, the heavy North American focus may limit exposure to international opportunities. To enhance geographic diversification, consider increasing allocations to underrepresented regions like Europe Emerging or Africa/Middle East, which could offer unique growth prospects and further reduce geographic risk concentration.

Redundant positions Info

  • Avantis® International Small Cap Value ETF
    Vanguard FTSE Developed Markets Index Fund ETF Shares
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation
  • ProShares UltraPro QQQ
    Vanguard S&P 500 ETF
    ProShares UltraPro S&P500
    High correlation

The portfolio contains several highly correlated assets, such as the Avantis® International Small Cap Value ETF and Vanguard FTSE Developed Markets Index Fund ETF Shares. High correlation among assets can limit diversification benefits, as these assets tend to move in the same direction. Reducing overlap by replacing some of these correlated assets with less correlated alternatives can enhance diversification and potentially improve risk-adjusted returns. This strategy can help smooth portfolio volatility and provide more consistent performance over time.

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.

Before optimizing, focus on reducing overlapping assets that offer no diversification benefits. By addressing these correlations, the portfolio can achieve a more efficient risk-return balance. For a riskier portfolio, consider increasing equity exposure or adding leveraged ETFs. Conversely, to adopt a more conservative approach, increase bond allocations or incorporate more stable sectors. Moving along the efficient frontier allows for adjustments in risk and return, aligning the portfolio with investment goals and risk tolerance while ensuring optimal performance.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® Emerging Markets Value ETF 3.70%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • ProShares Bitcoin Strategy ETF 47.30%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 3.50%
  • iShares Core S&P Mid-Cap ETF 1.20%
  • Nike Inc 1.40%
  • ProShares UltraPro QQQ 1.10%
  • ProShares UltraPro S&P500 0.70%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 2.60%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 2.94%

The portfolio's dividend yield stands at a modest 2.94%, with notable contributions from the ProShares Bitcoin Strategy ETF at an unusually high 47.3%. While dividends can provide a steady income stream, relying on high-yield, volatile assets like Bitcoin ETFs may introduce additional risk. For a more stable income, consider increasing exposure to traditionally higher-yielding ETFs or stocks with a history of consistent dividend payments. This approach can enhance the portfolio's income potential while maintaining a balanced risk profile.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • ProShares Bitcoin Strategy ETF 0.95%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • WisdomTree Emerging Markets SmallCap Dividend Fund 0.58%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • ProShares UltraPro QQQ 0.88%
  • ProShares UltraPro S&P500 0.92%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low, indicating cost-efficiency. However, some ETFs, like the ProShares Bitcoin Strategy ETF and ProShares UltraPro QQQ, have higher expense ratios, which could erode returns over time. To maintain cost-effectiveness, consider reallocating funds from higher-cost ETFs to those with lower fees, ensuring that the portfolio remains aligned with financial goals without unnecessary expenses. Keeping investment costs low is crucial for maximizing net returns and achieving long-term success.

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