High-growth portfolio with significant tech exposure and limited geographic diversification
Report created on Dec 29, 2024Risk profile
5/7
Diversification profile
2/5
Positions
-
CN iShares NASDAQ 100 UCITS ETF USD (Acc)
CNX1 - IE00B53SZB19 100.00%
The portfolio is entirely invested in the iShares NASDAQ 100 UCITS ETF, which is a concentrated allocation. This ETF tracks the NASDAQ 100 Index, primarily composed of large-cap technology stocks. Compared to a diversified benchmark that includes a mix of asset classes, this portfolio lacks diversification. This concentration can lead to higher risk, as performance is tied to a specific market segment. Consider diversifying by adding different asset classes, such as bonds or commodities, to spread risk and reduce volatility.
Growth
Historically, this portfolio has shown impressive performance with a CAGR of 20.68%. This indicates strong growth, especially compared to broader market indices which typically grow at a slower pace. However, the portfolio also experienced a significant maximum drawdown of -27.56%, highlighting its vulnerability during market downturns. While past performance is a useful indicator, it doesn't guarantee future results. It's essential to balance high returns with risk management strategies to protect gains during volatile periods.
Projection
The Monte Carlo simulation projects a wide range of potential future outcomes, using historical data to estimate possibilities. With 1,000 simulations, the 50th percentile suggests a potential return of 1,397.02%, while the 5th percentile is much lower at 336.67%. This spread indicates substantial uncertainty, typical for a high-growth, concentrated portfolio. Given the reliance on historical data, these projections are not definitive. Diversifying investments could help narrow this range, providing more stable expected outcomes.
Asset classes
- Stocks 100%
The portfolio is almost entirely composed of stocks, with a negligible cash component. This singular focus on equities may offer high growth potential but also increases exposure to market volatility. In contrast, a balanced portfolio typically includes bonds and other asset classes to mitigate risk. By incorporating additional asset types, you can achieve better diversification, which can smooth out returns and provide protection during economic downturns or stock market corrections.
Sectors
- Technology 53%
- Telecommunications 15%
- Consumer Discretionary 15%
- Consumer Staples 5%
- Health Care 5%
- Industrials 3%
- Basic Materials 1%
- Utilities 1%
- Financials 1%
- Energy 1%
The sector allocation is heavily skewed towards technology, accounting for over half of the portfolio. This tech concentration can lead to increased volatility, especially during periods of interest rate hikes or regulatory changes affecting the sector. While technology has driven past growth, consider diversifying across more sectors to reduce dependence on any single industry. A balanced sector allocation can help stabilize returns and minimize sector-specific risks.
Regions
- North America 98%
- Europe Developed 1%
- Latin America 1%
Geographically, the portfolio is overwhelmingly focused on North America, with 97.77% exposure. This lack of geographic diversification may limit potential gains from emerging markets or other regions with different growth dynamics. By expanding geographic exposure, you can tap into varied economic cycles and reduce the risk of regional downturns. Consider reallocating a portion of the portfolio to include international or emerging market equities for a more balanced global approach.
Ongoing product costs
- iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
- Weighted costs total (per year) 0.36%
The Total Expense Ratio (TER) for the iShares NASDAQ 100 UCITS ETF is 0.36%, which is relatively low. Keeping costs down is crucial for long-term investment success, as high fees can erode returns over time. This cost efficiency aligns with best practices, ensuring more of your money is working for you. Nonetheless, always review fee structures across investments to ensure they remain competitive and in line with your financial goals.
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