A growth-focused portfolio with high technology exposure and limited geographic diversification

Report created on Dec 6, 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 weighted towards equities, with 99.86% in stocks and a mere 0.14% in cash. It is composed of three main ETFs: Vanguard Total Stock Market Index Fund ETF Shares (50%), Invesco QQQ Trust (25%), and VanEck Semiconductor ETF (25%). This composition indicates a strong focus on growth, particularly within the technology sector. While this can lead to significant returns during market upswings, it also exposes the portfolio to heightened volatility. To balance this risk, consider incorporating other asset classes, such as bonds or real estate, which may provide stability during market downturns.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 19.06%. However, it also experienced a maximum drawdown of -36.44%, suggesting significant volatility. The performance relies on a small number of days (41) that account for 90% of returns, highlighting the importance of market timing. While past performance can be indicative of potential future success, it's crucial to remember that it doesn't guarantee future results. Diversifying into less volatile assets may help mitigate the risk of significant drawdowns in the future.

Projection Info

Using Monte Carlo simulation, the portfolio's potential future outcomes have been projected. This method uses historical data to simulate 1,000 possible future scenarios, providing a range of potential returns. The median expected return is 1,272.8%, with a 5th percentile at 181.22% and a 67th percentile at 1,957.76%. While the simulation suggests positive returns in most scenarios, it's important to understand that these are projections based on past data and assumptions. They do not account for future market changes, so it's wise to regularly review and adjust the portfolio as needed.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely invested in stocks, with only a negligible allocation to cash. This lack of diversification across asset classes can lead to increased risk, particularly during market downturns when equities may perform poorly. While stocks offer growth potential, incorporating a mix of asset classes like bonds or commodities can help reduce risk and provide a more balanced approach. This diversification can potentially lead to more stable returns over time, especially in volatile market conditions.

Sectors Info

  • Technology
    53%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Health Care
    7%
  • Financials
    7%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in the technology sector, which accounts for 53.15% of the allocation. Other sectors like consumer cyclicals, communication services, and healthcare have smaller representations. This concentration in technology can lead to high growth potential but also increases vulnerability to sector-specific downturns. To mitigate this risk, consider diversifying into underrepresented sectors such as energy, utilities, or real estate. This balanced sectoral allocation can help protect against sector-specific risks and provide more consistent returns.

Regions Info

  • North America
    94%
  • Asia Developed
    3%
  • Europe Developed
    2%

The portfolio's geographic exposure is predominantly in North America, with 94.25% allocation. This limited geographic diversification can expose the portfolio to regional economic and political risks. While North America has historically been a strong performer, expanding into other regions like Asia or Europe can provide diversification benefits. This broader geographic exposure can help reduce risk and potentially capture growth opportunities in emerging markets. Consider reallocating a portion of the portfolio to international markets to enhance diversification and mitigate regional risks.

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 can potentially be optimized using the Efficient Frontier, which helps find the best possible risk-return ratio for a given set of assets. The current allocation may not be fully efficient, as it focuses heavily on growth-oriented assets. By adjusting the allocation to include a mix of low-correlation assets, the portfolio can achieve a more favorable risk-return balance. This optimization process involves reallocating existing investments rather than introducing new ones, ensuring that the portfolio remains aligned with the investor's goals and risk tolerance while improving efficiency.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 0.85%

The portfolio's dividend yield is relatively low at 0.85%, with the highest contribution from the Vanguard Total Stock Market Index Fund ETF Shares at 1.2%. While dividends can provide a steady income stream and help cushion against market volatility, this portfolio prioritizes growth over income. If generating income is a priority, consider reallocating a portion of the investments into higher-yielding assets. This approach can help balance growth with income, providing a more comprehensive investment strategy that caters to both capital appreciation and income generation.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio is 0.15%, with the Vanguard Total Stock Market Index Fund ETF Shares having the lowest cost at 0.03%. While these costs are relatively low, they can still impact long-term returns. Minimizing expenses is crucial to maximizing net returns over time. Regularly reviewing and comparing the expense ratios of current investments with alternative options can help identify cost-saving opportunities. Consider shifting to lower-cost funds if available, as this can help enhance portfolio performance without altering the overall strategy.

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