A tech-heavy growth portfolio with strong historical returns but high risk exposure

Report created on Jan 12, 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 technology, with 80% of assets in this sector through both ETFs and individual stocks. This focus on technology is typical for growth-oriented portfolios, aiming for higher returns. However, it lacks diversification across other asset classes, with nearly 100% in stocks. A balanced portfolio usually includes a mix of stocks, bonds, and cash to mitigate risk. Consider adding other asset classes to reduce volatility and improve risk management, especially during downturns.

Growth Info

Historically, the portfolio has shown impressive growth with a CAGR of 30.19%. This indicates strong past performance, particularly in the tech sector. However, the maximum drawdown of nearly 60% highlights significant volatility. High returns often come with increased risk, and this portfolio is no exception. While past success is encouraging, it's crucial to remember that historical performance doesn't guarantee future results. Regularly reviewing and adjusting your investment strategy can help manage risk better.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, suggests a broad range of future returns. The median outcome projects a 5,915.96% return, with 999 out of 1,000 simulations showing positive returns. While this is promising, simulations are based on past trends and can't predict future market conditions accurately. Use these projections as a guide, not a certainty, and remain flexible in your investment strategy to respond to changing market dynamics.

Asset classes Info

  • Stocks
    100%

With nearly 100% allocation to stocks, the portfolio lacks diversification across asset classes. This concentration increases vulnerability to stock market fluctuations. Diversification typically involves spreading investments across different asset classes like bonds, real estate, or commodities, which can reduce risk and stabilize returns. Consider incorporating a mix of asset classes to enhance stability and potentially smooth out the impact of market volatility on your portfolio's performance.

Sectors Info

  • Technology
    80%
  • Financials
    4%
  • Health Care
    3%
  • Consumer Discretionary
    3%
  • Telecommunications
    3%
  • Industrials
    2%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily weighted towards technology, comprising 79.68% of total assets. While this sector has driven significant growth, it also introduces higher volatility, especially during market corrections or interest rate hikes. The lack of exposure to sectors like consumer staples or utilities, which tend to be more stable, may increase risk. To reduce sector-specific risk, consider diversifying into sectors that are less correlated with technology, providing a buffer against tech downturns.

Regions Info

  • North America
    95%
  • Asia Developed
    3%
  • Europe Developed
    2%

The portfolio's geographic allocation is heavily skewed towards North America, with 95.49% exposure. This concentration limits diversification benefits that come from investing in different regions. Global diversification can reduce geopolitical risk and provide access to growth opportunities in emerging markets. Consider increasing exposure to international markets to balance geographic risk and potentially enhance returns by capturing global economic growth.

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's risk-return profile can potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This process involves reallocating assets to achieve maximum returns for a given level of risk. While this portfolio is focused on growth, consider using optimization techniques to explore adjustments that could enhance returns or reduce risk without compromising your investment goals.

Dividends Info

  • VanEck Semiconductor ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.65%

The portfolio's dividend yield is relatively low at 0.65%, reflecting its growth-oriented nature. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. For investors seeking regular income, higher-dividend-paying assets might be more suitable. If income is a priority, consider reallocating a portion of the portfolio to dividend-focused investments to increase yield and provide a steady income stream.

Ongoing product costs Info

  • VanEck Semiconductor ETF 0.35%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is impressively low. Lower costs can significantly enhance long-term returns by minimizing the drag on performance. Keeping expenses low is a key component of successful investing, as it allows more of your money to remain invested and grow over time. Continue to monitor and manage costs, ensuring that any new investments align with your cost-efficiency goals to maintain this advantage.

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