Concentrated tech-heavy portfolio with significant exposure to Alphabet Inc Class A

Report created on Mar 17, 2025

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 concentrated in common stocks, with a significant 63.50% allocated to Alphabet Inc Class A. This weighting suggests a strong conviction in Alphabet's growth prospects. Compared to typical diversified portfolios, this concentration increases risk but could offer higher returns if Alphabet performs well. The portfolio includes a mix of tech giants and smaller holdings, with a minor allocation to an ETF. To mitigate risk, consider diversifying with more ETFs or stocks across different sectors or asset classes. This would align the portfolio more closely with broader market benchmarks.

Growth Info

Historically, the portfolio has delivered impressive returns, with a CAGR of 19.61%. This figure indicates strong performance relative to many benchmarks. However, the maximum drawdown of -45.83% highlights the potential for significant losses during downturns. This volatility is typical for growth-focused portfolios. To balance risk and reward, consider gradually increasing exposure to more stable assets. While past performance is encouraging, it doesn't guarantee future results. Diversifying further could help reduce the impact of future market downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to predict potential future outcomes, suggests a wide range of possible returns. The median scenario projects a 273.1% return, while the worst-case scenario could see an -83.7% decline. With 763 out of 1,000 simulations showing positive returns, the outlook is optimistic but uncertain. It's important to remember that simulations are based on past data, which may not fully capture future market conditions. To enhance predictability, consider incorporating assets with different risk profiles to cushion against adverse outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can drive growth but also increase volatility. This lack of diversification across asset classes limits risk management opportunities. In comparison, a more balanced portfolio might include bonds, real estate, or commodities to stabilize returns. Diversifying into additional asset classes could provide a buffer during stock market downturns. Consider gradually introducing other asset types to achieve a more balanced risk-return profile, aligning with the diversification practices of broader benchmarks.

Sectors Info

  • Telecommunications
    80%
  • Technology
    9%
  • Energy
    4%
  • Financials
    4%
  • Consumer Discretionary
    1%
  • Health Care
    1%
  • Industrials
    1%

The portfolio is predominantly concentrated in the Communication Services sector, driven by the heavy weighting in Alphabet Inc and Meta Platforms Inc. This sectoral focus can lead to higher volatility, especially during sector-specific downturns. While these companies have strong growth potential, consider diversifying into other sectors like healthcare or consumer staples to mitigate risk. Balancing sector allocations could enhance stability and align the portfolio more closely with diversified benchmarks, reducing the impact of sector-specific risks.

Regions Info

  • North America
    93%
  • Asia Developed
    7%

Geographically, the portfolio is heavily skewed towards North America, with 93% of assets located there. This concentration may limit exposure to growth opportunities in other regions, such as Asia or Europe. While the U.S. market has been a strong performer, diversifying geographically can reduce regional risks and tap into global growth. Consider gradually increasing exposure to international markets, potentially through global ETFs, to enhance diversification and align more closely with global benchmarks.

Market capitalization Info

  • Mega-cap
    83%
  • Large-cap
    16%
  • Mid-cap
    1%

The portfolio is predominantly invested in mega-cap stocks, which comprise 83% of the holdings. These large companies offer stability and liquidity but may also limit growth potential compared to smaller firms. While mega-caps can anchor a portfolio, incorporating more mid- and small-cap stocks could enhance growth prospects. This approach can increase diversification and capture opportunities in emerging companies. Consider adjusting allocations to include a broader range of market capitalizations for a balanced risk-return profile.

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 Efficient Frontier analysis suggests that the current portfolio could be optimized for better risk-adjusted returns. An optimized portfolio with the same risk level is projected to have an expected return of 35.53%, significantly higher than the current projection. This optimization involves adjusting asset weights for the best possible risk-return ratio. While this approach doesn't guarantee diversification, it can enhance performance. Consider rebalancing the portfolio to align with the Efficient Frontier, maximizing returns without increasing risk.

Dividends Info

  • Energy Transfer LP 6.90%
  • Alphabet Inc Class A 0.50%
  • Meta Platforms Inc. 0.30%
  • SPDR S&P 500 ETF Trust 1.00%
  • Weighted yield (per year) 0.72%

The portfolio's dividend yield is modest, with a total yield of 0.72%. Energy Transfer LP contributes significantly with a 6.90% yield, while other holdings offer minimal dividends. For growth-focused investors, dividends may not be a primary concern, but they can provide steady income. If income generation is a goal, consider increasing exposure to dividend-paying stocks or ETFs. This approach can enhance cash flow and provide a buffer during market downturns, complementing the portfolio's growth orientation.

Ongoing product costs Info

  • SPDR S&P 500 ETF Trust 0.10%
  • Weighted costs total (per year) 0.01%

The portfolio's costs are impressively low, with the SPDR S&P 500 ETF Trust having a 0.10% Total Expense Ratio (TER). Low costs support better long-term performance by minimizing the drag on returns. This cost efficiency aligns well with best practices and enhances the portfolio's potential for growth. Maintaining low costs should remain a priority. Consider reviewing other holdings for cost efficiency and exploring additional low-cost investment options to further optimize returns.

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