Tech-focused growth portfolio with high concentration in Apple and limited geographic diversity

Report created on Jan 25, 2025

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 a few tech stocks, with Apple Inc making up over 40% of the total. It includes a mix of individual stocks and ETFs, with a strong emphasis on large-cap U.S. equities. Compared to a diversified benchmark, the portfolio lacks exposure to various asset classes and sectors, which can increase risk. This composition may lead to significant volatility, especially if the tech sector faces downturns. To mitigate risk, consider diversifying into other sectors and asset classes, such as bonds or international equities, to achieve a more balanced allocation.

Growth Info

The portfolio has shown impressive historical performance with a CAGR of 17.19%, outperforming many benchmarks. However, it also experienced a significant maximum drawdown of -27.57%, indicating high volatility. This performance highlights the potential for strong returns, but also the risk of substantial losses. It's crucial to remember that past performance doesn't guarantee future results. To protect against downside risk, consider implementing strategies like stop-loss orders or diversifying holdings to reduce volatility while maintaining a growth-oriented approach.

Projection Info

A Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a wide range of potential returns. The median scenario projects a 265% increase, while the worst-case scenario shows an 88.3% loss. Although 717 out of 1,000 simulations resulted in positive returns, the wide variance underscores the portfolio's risk. It's important to note that these projections are not guarantees. To manage risk, consider adjusting the portfolio's asset allocation to include more stable investments that can provide a buffer during market downturns.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can lead to high volatility and potential risk. While stocks offer growth potential, the absence of other asset classes like bonds or real estate can result in a lack of diversification. A more balanced portfolio typically includes a mix of asset classes to spread risk. To enhance diversification, consider adding fixed-income securities or alternative investments, which can provide stability and reduce overall portfolio volatility, especially during market downturns.

Sectors Info

  • Technology
    63%
  • Telecommunications
    7%
  • Financials
    7%
  • Industrials
    7%
  • Consumer Discretionary
    5%
  • Health Care
    4%
  • Consumer Staples
    2%
  • Real Estate
    2%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%

With 63% of the portfolio in the technology sector, there is a significant concentration risk. This tech-heavy focus can lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. Compared to a diversified benchmark, this sector allocation is quite unbalanced. To mitigate sector-specific risks, consider reallocating some investments into underrepresented sectors like healthcare or consumer staples, which can provide stability and reduce the impact of tech sector fluctuations on the overall portfolio.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

The portfolio's geographic exposure is overwhelmingly concentrated in North America, accounting for 98% of the holdings. This lack of international diversification can increase vulnerability to regional economic downturns or policy changes. Compared to global benchmarks, this allocation is quite narrow. To improve geographic diversification, consider increasing exposure to international markets, including both developed and emerging economies, which can provide opportunities for growth and reduce the impact of U.S.-specific risks on the portfolio.

Market capitalization Info

  • Mega-cap
    67%
  • Large-cap
    17%
  • Mid-cap
    10%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is heavily weighted towards mega-cap stocks, which comprise 67% of the holdings. This concentration in large companies can provide stability but may limit growth potential compared to smaller-cap stocks. While large-cap stocks are generally more stable, they can also be less responsive to market changes. To enhance diversification and capture potential growth, consider increasing exposure to small and mid-cap stocks, which may offer higher returns but come with increased volatility.

Redundant positions Info

  • SPDR S&P 500 ETF Trust
    Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio contains highly correlated assets, such as the SPDR S&P 500 ETF Trust and the Vanguard Total Stock Market Index Fund ETF Shares. High correlation means these assets tend to move together, reducing diversification benefits. In market downturns, this could lead to amplified losses. To improve diversification, consider replacing some correlated assets with investments that have a low correlation to the existing holdings, thereby spreading risk more effectively and potentially improving the portfolio's risk-adjusted 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 could be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. Currently, the portfolio's expected return is below the optimal level for its risk. By adjusting the allocation among the existing assets, it's possible to increase expected returns without adding risk. This means reallocating funds to achieve a more efficient mix, potentially enhancing returns while maintaining the same risk level. It's important to note that optimization focuses on the current assets and doesn't necessarily address diversification or other goals.

Dividends Info

  • Apple Inc 0.40%
  • Global X Artificial Intelligence & Technology ETF 0.10%
  • Alphabet Inc Class A 0.30%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 0.80%
  • Microsoft Corporation 0.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • SPDR® Portfolio S&P 600 Small Cap ETF 1.80%
  • SPDR S&P 500 ETF Trust 0.80%
  • SPDR® Portfolio S&P 500 Value ETF 1.60%
  • Vanguard Financials Index Fund ETF Shares 1.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Total World Stock Index Fund ETF Shares 1.90%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Welltower Inc 1.90%
  • Weighted yield (per year) 0.70%

The portfolio's dividend yield is relatively low at 0.70%, reflecting its focus on growth rather than income. Dividend-paying stocks can provide a steady income stream and help cushion against market volatility. For investors seeking income, it may be beneficial to incorporate higher-yielding stocks or dividend-focused ETFs into the portfolio. This adjustment can enhance the income potential and provide a buffer during market downturns, offering a more balanced approach between growth and income.

Ongoing product costs Info

  • Global X Artificial Intelligence & Technology ETF 0.68%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 0.57%
  • Invesco NASDAQ 100 ETF 0.15%
  • SPDR® Portfolio S&P 600 Small Cap ETF 0.03%
  • SPDR S&P 500 ETF Trust 0.10%
  • SPDR® Portfolio S&P 500 Value ETF 0.04%
  • Vanguard Financials Index Fund ETF Shares 0.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's overall costs are low, with a Total Expense Ratio (TER) of 0.04%. Low costs are beneficial for long-term performance as they allow more of the portfolio's returns to be retained by the investor. However, some individual ETFs have higher expense ratios, such as the Global X Artificial Intelligence & Technology ETF at 0.68%. To optimize costs further, consider replacing high-cost funds with similar lower-cost alternatives, ensuring that the portfolio remains cost-efficient while maintaining its strategic objectives.

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