Growth-Focused Portfolio with Strong Technology Bias and Moderate Diversification

Report created on Dec 5, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily invested in common stocks and ETFs, with a significant allocation towards technology companies like Taiwan Semiconductor Manufacturing and Broadcom Inc. This concentration in technology suggests a focus on growth, but it also means higher volatility. The inclusion of consumer defensive stocks like The Coca-Cola Company and Johnson & Johnson provides some stability. However, the portfolio's overall diversification is moderate, leaving room for improvement. Balancing growth with stability is crucial for long-term success, and diversifying across more sectors and asset classes can help manage risk better.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 24.24%. However, this growth comes with a downside, as evidenced by a maximum drawdown of -32.03%. The high returns are concentrated in a few days, indicating volatility. Understanding the risk-return trade-off is essential for managing expectations and making informed decisions. To maintain this performance, consider strategies that mitigate downside risks while capitalizing on growth opportunities, such as diversification into less volatile asset classes or sectors.

Projection Info

Using a Monte Carlo simulation, which involves running numerous scenarios to estimate potential future outcomes, the portfolio's projected annualized return is 25.98%. With a hypothetical initial investment, the simulations suggest a wide range of outcomes, with the median scenario showing substantial growth. While this projection is optimistic, it's important to remember that past performance is not indicative of future results. The portfolio's high-risk nature could lead to significant fluctuations. Balancing the portfolio to align with risk tolerance and financial goals is recommended to achieve more consistent returns.

Asset classes Info

  • Stocks
    99%
  • No data
    1%

The portfolio is predominantly composed of stocks, making up over 98% of the allocation, with minimal exposure to bonds and other asset classes. This heavy reliance on equities aligns with a growth-focused strategy but increases vulnerability to market volatility. Diversifying into bonds or other asset classes could provide more stability and reduce risk. A well-rounded portfolio with a mix of asset classes can help cushion against market downturns and provide more consistent returns over time, aligning with long-term financial goals.

Sectors Info

  • Technology
    49%
  • Consumer Discretionary
    21%
  • Consumer Staples
    10%
  • Health Care
    9%
  • Telecommunications
    3%
  • Financials
    3%
  • Industrials
    2%
  • Utilities
    1%
  • Energy
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology dominates the sector allocation, accounting for nearly half of the portfolio, followed by consumer cyclicals and defensives. While this focus on technology can drive growth, it also exposes the portfolio to sector-specific risks. A broader sector allocation can enhance diversification and reduce reliance on a single sector's performance. Consider spreading investments across various industries to mitigate risks associated with sector downturns and to capture growth opportunities in other areas. This approach can lead to a more resilient portfolio in different market conditions.

Regions Info

  • North America
    78%
  • Asia Emerging
    21%
  • Europe Developed
    1%
  • Asia Developed
    1%

Geographically, the portfolio is concentrated in North America and Asia Emerging, with minimal exposure to other regions. This concentration can lead to regional risks and missed opportunities in other markets. Expanding geographic diversification can help capture growth in different economic environments and reduce region-specific risks. While North America and Asia Emerging offer growth potential, considering investments in Europe, Latin America, and other regions can provide a more balanced global exposure and enhance the portfolio's resilience against regional economic fluctuations.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    ProShares Ultra S&P500
    High correlation

The portfolio contains highly correlated assets, particularly among ETFs like the Vanguard S&P 500 ETF and the ProShares Ultra S&P500. These correlations suggest overlapping investments that may not provide diversification benefits. High correlation means that these assets tend to move in the same direction, which can amplify risk during market downturns. Reducing overlap by selecting less correlated assets can enhance diversification and improve risk management. A diversified portfolio with low correlation among assets can better withstand market volatility and achieve more stable returns.

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 optimization chart indicates that before optimizing for efficiency, reducing asset overlap should be prioritized. Highly correlated assets, like the Vanguard S&P 500 ETF and ProShares Ultra S&P500, offer limited diversification benefits. By addressing these overlaps, the portfolio can potentially achieve a better risk-return profile. Moving along the efficient frontier allows for adjusting the portfolio's risk level. A riskier portfolio may offer higher returns but with increased volatility, while a more conservative approach focuses on stability and lower risk. Balancing these elements is key to aligning with financial goals.

Dividends Info

  • Broadcom Inc 1.20%
  • JPMorgan Equity Premium Income ETF 7.10%
  • Johnson & Johnson 2.50%
  • The Coca-Cola Company 2.30%
  • Kroger Company 2.00%
  • McDonald’s Corporation 1.70%
  • Microsoft Corporation 0.50%
  • Invesco QQQ Trust 0.60%
  • iShares Semiconductor ETF 0.70%
  • ProShares Ultra S&P500 0.70%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.66%

The portfolio's total dividend yield stands at 1.66%, with contributions from companies like Broadcom Inc, Johnson & Johnson, and The Coca-Cola Company. While the yield provides some income, it's relatively modest for a growth-focused portfolio. Dividends can offer stability and a source of income during market volatility. Enhancing yield through dividend-focused investments or reallocating towards higher-yielding assets can provide additional income. Balancing growth and income objectives is crucial for achieving financial goals and ensuring long-term portfolio sustainability.

Ongoing product costs Info

  • JPMorgan Equity Premium Income ETF 0.35%
  • Invesco QQQ Trust 0.20%
  • iShares Semiconductor ETF 0.35%
  • ProShares Ultra S&P500 0.91%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, with costs primarily from ETFs like the JPMorgan Equity Premium Income ETF and Invesco QQQ Trust. Keeping costs low is essential for maximizing returns, as high fees can erode gains over time. The portfolio's low TER is a positive aspect, but monitoring costs regularly is important. Consider options with lower fees without compromising on quality or performance. Maintaining a cost-effective portfolio while achieving desired outcomes can enhance long-term returns and support financial objectives.

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