Aggressive Low Diversity Portfolio with High Tech Exposure and Strong Historical Performance

Report created on Dec 5, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in a few positions, with a significant portion invested in Apple Inc and the Vanguard S&P 500 ETF. This concentration indicates a low level of diversification, which could lead to higher risk exposure. Having a diversified portfolio is essential to mitigate risks and ensure stability during market fluctuations. It's crucial to consider spreading investments across more sectors and asset classes to reduce risk and enhance potential returns. A more balanced portfolio can provide better risk-adjusted returns over time.

Growth Info

The portfolio's historical performance shows a compound annual growth rate (CAGR) of 22.5%, which is impressive. However, it also experienced a maximum drawdown of -42.6%, highlighting its volatility. High returns often come with increased risk, and understanding this trade-off is vital. While the growth rate is attractive, the significant drawdown suggests the need for caution. To maintain a balance between risk and return, consider incorporating less volatile assets or strategies to cushion against potential downturns.

Projection Info

Using a Monte-Carlo simulation, we project the portfolio's future performance with a hypothetical initial investment. The simulation, which ran 1,000 times, suggests a wide range of potential outcomes, with a 50th percentile return of 100.19% and a 5th percentile of -88.1%. This illustrates the inherent uncertainty and potential risk in the current portfolio. To improve the odds of achieving favorable outcomes, consider rebalancing the portfolio to include more stable assets, which could result in a more predictable performance.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly composed of stocks, accounting for nearly 100% of the total investments. This heavy reliance on a single asset class increases exposure to market volatility. Diversifying across different asset classes, such as bonds or real estate, can provide stability and reduce overall risk. A more diversified asset allocation can help cushion against market downturns and provide more consistent returns over time. Consider gradually incorporating other asset classes to enhance the portfolio's resilience.

Sectors Info

  • Technology
    48%
  • Consumer Discretionary
    31%
  • Telecommunications
    5%
  • Financials
    4%
  • Health Care
    4%
  • Industrials
    2%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology dominates the sector allocation with nearly half of the portfolio invested in this area. While tech has been a strong performer, overexposure to a single sector can be risky if the sector underperforms. Balancing investments across various sectors can help mitigate sector-specific risks and improve overall portfolio stability. Consider spreading investments across sectors like healthcare, financials, and consumer staples to achieve a more balanced sector allocation and reduce dependency on the tech sector.

Regions Info

  • North America
    100%

The portfolio is heavily concentrated in North American assets, with minimal exposure to other regions. This geographic concentration can limit opportunities for growth and increase vulnerability to regional economic downturns. Expanding geographic diversification can enhance potential returns and reduce regional risks. Consider exploring international investments to capture growth opportunities in other markets and achieve a more balanced geographic allocation. Diversifying across countries can provide exposure to different economic cycles and trends.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Growth Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 ETF and the Vanguard Growth Index Fund ETF Shares. High correlation means these assets tend to move in the same direction, offering little diversification benefit. Reducing correlation by diversifying into less correlated assets can improve risk-adjusted returns. Consider reviewing the portfolio to identify and replace overlapping investments with those that provide better diversification and potentially enhance overall portfolio performance.

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.

Before optimizing, it's crucial to address the overlapping assets that provide no diversification benefit. The portfolio can be improved by removing these highly correlated assets, which will enhance its efficiency. Moving along the efficient frontier can help achieve a more risk-adjusted return. By reallocating investments, the portfolio can become either riskier or more conservative, depending on the investor's preferences. Focus on creating a balanced portfolio that aligns with risk tolerance and investment goals for optimal performance.

Dividends Info

  • Apple Inc 0.40%
  • Comcast Corp 2.90%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.58%

The portfolio's dividend yield is relatively low at 0.58%, with contributions mainly from Comcast Corp and the Vanguard S&P 500 ETF. While dividends can provide a steady income stream, the current yield may not significantly impact overall returns. Consider the role of dividends in the investment strategy and whether a higher yield is desired. If income generation is a priority, exploring higher-yielding investments or dividend-focused strategies may be beneficial, while maintaining a balance with growth-oriented assets.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.01%

The portfolio's costs are minimal, with the Vanguard S&P 500 ETF and Vanguard Growth Index Fund ETF Shares having low expense ratios. Keeping investment costs low is crucial for maximizing net returns. Low costs are an advantage, as they allow more of the portfolio's returns to be retained. Continuously monitor costs and seek opportunities to minimize fees further. Consider reviewing any high-cost investments and exploring lower-cost alternatives to enhance the portfolio's cost efficiency and overall performance.

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