Growth-focused portfolio with low diversification and a high concentration in US equities

Report created on Dec 29, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in equities, with over 98% allocated to stocks. The majority of the portfolio is invested in the State Street Equity 500 Index II Portfolio and the Eagle Mid Cap Growth Fund. Compared to a typical balanced portfolio, which might include a mix of stocks, bonds, and other assets, this portfolio is highly focused on equities, indicating a growth-oriented strategy. To enhance diversification, consider incorporating other asset classes like bonds or real estate, which can help mitigate risk during market volatility.

Growth Info

The historical performance of this portfolio shows a Compound Annual Growth Rate (CAGR) of 10.89%, which is a strong return over time. However, it also experienced a maximum drawdown of -35.36%, indicating significant volatility. This reflects the potential for substantial short-term losses, typical of equity-heavy portfolios. When compared to a benchmark like the S&P 500, which has similar risk characteristics, this performance is competitive. Investors should be prepared for potential fluctuations and consider whether they can tolerate such volatility.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. The 5th percentile result shows a possible loss of -4.88%, while the median projection is a substantial gain of 262.47%. This indicates a high level of uncertainty, typical for equity-heavy portfolios. While simulations provide useful insights, they are based on past data and cannot guarantee future results. Investors should use these projections as a guide but remain prepared for a variety of outcomes.

Asset classes Info

  • Stocks
    98%
  • Cash
    2%

With nearly all assets in stocks and a small allocation to cash, this portfolio lacks diversification across asset classes. While equities can offer high returns, they also expose the investor to significant risk. In contrast, a diversified portfolio might include bonds, commodities, or real estate, which can provide stability during market downturns. To enhance risk management, consider adding other asset classes that typically move differently from stocks, helping to balance the portfolio.

Sectors Info

  • Technology
    30%
  • Industrials
    13%
  • Consumer Discretionary
    13%
  • Health Care
    12%
  • Financials
    12%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    4%
  • Utilities
    3%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards the technology sector, comprising nearly 30% of the total allocation. This concentration can lead to higher volatility, especially during periods of technological disruption or regulatory changes. While technology has been a strong performer in recent years, diversification across more sectors could reduce risk. Balancing the allocation with sectors like healthcare or consumer goods may provide more stability and protect against sector-specific downturns.

Regions Info

  • North America
    100%

The portfolio is overwhelmingly concentrated in North American assets, with over 99% exposure. This lack of geographic diversification can increase vulnerability to regional economic downturns or policy changes. In contrast, a more globally diversified portfolio might include significant allocations to Europe, Asia, or emerging markets. Expanding geographic exposure can help mitigate regional risks and capture growth opportunities in other parts of the world.

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 be optimized using the Efficient Frontier, which suggests a more efficient allocation could achieve a higher expected return of 12.07% with the same risk level. The Efficient Frontier is a concept in finance that represents the set of optimal portfolios offering the highest expected return for a defined level of risk. While this optimization is based on current assets and allocation changes, it may not account for other investment goals like income generation or specific sector exposure.

Ongoing product costs Info

  • EAGLE MID CAP GROWTH FUND CLASS I 0.73%
  • JPMORGAN LARGE CAP GROWTH FUND CLASS R6 0.44%
  • STATE STREET EQUITY 500 INDEX II PORTFOLIO STATE STREET EQUITY 500 INDEX II PORTFOLIO 0.02%
  • Weighted costs total (per year) 0.35%

The total expense ratio (TER) of 0.35% is relatively low, particularly due to the State Street Equity 500 Index II Portfolio's minimal cost. This is beneficial for long-term returns, as lower fees mean more of the investment's gains remain in the portfolio. However, the Eagle Mid Cap Growth Fund has a higher expense ratio, which could be optimized by exploring lower-cost alternatives. Regularly reviewing and minimizing costs can significantly enhance net returns over time.

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