A growth-focused portfolio with concentrated sector exposure and moderate geographic diversification
Report created on Jan 23, 2025Risk profile
5/7
Diversification profile
3/5
Positions
-
OM Oppenheimer Main St Opp A
OMSOX - US68380D8763 70.00% -
OP Oppenheimer Glabal A Fund
OPPAX - US6839241048 30.00%
This portfolio is heavily weighted towards two Oppenheimer funds, with Oppenheimer Main St Opp A making up 70% and Oppenheimer Global A Fund the remaining 30%. Such concentration in a limited number of funds can lead to higher risk due to lack of diversification. A comparison to a benchmark might reveal that the portfolio lacks exposure to other asset classes like bonds, which could help in mitigating risk. Consider diversifying further by adding different funds or asset types to balance growth potential with risk management.
Growth
Historically, the portfolio has achieved a CAGR of 5.81%, which is a solid return for a growth-oriented profile. However, the maximum drawdown of -40.10% indicates significant volatility, which can be concerning for investors during market downturns. This performance suggests that while the portfolio has potential for growth, it also carries substantial risk. Comparing this to a benchmark's performance could help in assessing if the risk is justified by the returns. Diversification might help in reducing drawdowns and maintaining steady growth.
Projection
Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a 50th percentile return of 58% and a 5th percentile loss of -59.2%. While 732 out of 1,000 simulations resulted in positive returns, the wide range of outcomes highlights the uncertainty inherent in market investments. It's essential to remember that these projections are not guarantees, as they rely on past data which might not predict future conditions. Regularly reviewing and adjusting the portfolio can help in managing this uncertainty.
Asset classes
- Stocks 100%
The portfolio is entirely invested in stocks, which can drive growth but also increases volatility. This lack of diversification across asset classes means that the portfolio is highly susceptible to market swings. In comparison, a more diversified portfolio might include bonds or other asset classes to provide stability and reduce risk. Considering adding different asset classes could offer a buffer against stock market volatility, potentially smoothing out returns over time.
Sectors
- Technology 32%
- Telecommunications 13%
- Financials 13%
- Health Care 11%
- Consumer Discretionary 9%
- Industrials 8%
- Consumer Staples 4%
- Real Estate 3%
- Energy 3%
- Utilities 2%
- Basic Materials 2%
The portfolio is notably concentrated in the Technology sector, making up 32% of the allocation. This sectoral tilt can lead to higher volatility, especially during periods of tech market corrections. While tech has been a strong performer, overexposure can increase risk. Balancing the sector allocation by including more defensive sectors like Utilities or Consumer Defensive could help stabilize returns. Comparing this allocation to a benchmark might reveal areas for potential rebalancing.
Regions
- North America 87%
- Europe Developed 9%
- Asia Emerging 3%
- Japan 1%
With 87% of the portfolio allocated to North America, geographic diversification is limited. This concentration could expose the portfolio to regional economic downturns. A more balanced geographic allocation, similar to common benchmarks, might include increased exposure to Europe or Emerging Markets. Diversifying geographically can help mitigate risks associated with economic and political changes in a single region, potentially enhancing long-term performance.
Market capitalization
- Mega-cap 54%
- Large-cap 25%
- Mid-cap 18%
- Small-cap 2%
The portfolio leans heavily towards large-cap stocks, with 54% in mega-cap and 25% in big-cap companies. This focus on larger companies can provide stability and lower volatility compared to smaller-cap stocks. However, it might limit growth potential, as smaller companies often offer higher returns. Including more mid- or small-cap stocks could enhance growth opportunities, although it may also increase risk. Balancing different market caps can create a more robust portfolio.
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 could potentially benefit from optimization using the Efficient Frontier, a concept that aims to achieve the best possible risk-return ratio. By adjusting the allocation between the existing assets, it might be possible to improve returns for the same level of risk or reduce risk for the same level of return. This optimization does not necessarily mean adding new assets but rather fine-tuning the existing allocation to enhance efficiency.
Dividends
- Oppenheimer Main St Opp A 0.10%
- Weighted yield (per year) 0.07%
The portfolio's dividend yield is relatively low at 0.07%, which is typical for growth-focused investments. While dividends can provide steady income, growth portfolios often prioritize capital appreciation over income generation. Investors seeking income might consider adding higher-yielding assets. However, for those focused on growth, maintaining a low dividend yield is consistent with the strategy of reinvesting earnings for long-term gains.
Ongoing product costs
- Oppenheimer Main St Opp A 1.06%
- Oppenheimer Glabal A Fund 1.06%
- Weighted costs total (per year) 1.06%
The portfolio's total expense ratio (TER) is 1.06%, which is relatively high compared to passive investment options like index funds. High costs can erode returns over time, especially in volatile markets. Reducing costs by exploring lower-cost funds or ETFs could improve net returns. Keeping an eye on fees and seeking cost-effective investment options is crucial for optimizing long-term growth potential.
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