Aggressive portfolio with strong tech focus and limited geographic diversification

Report created on Dec 13, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily skewed towards common stocks, with 99.99% of its allocation in equities. The largest position is in NVIDIA Corporation, representing 15% of the portfolio, followed by a mix of other tech-driven and industrial companies. This composition indicates a focus on growth, primarily through tech investments, while the inclusion of the Vanguard S&P 500 ETF provides some broad market exposure. The high concentration in a few stocks increases potential returns but also elevates risk. Diversifying further by including other asset classes, like bonds or international equities, could help balance risk and provide more stable returns.

Growth Info

Historically, this portfolio has shown an impressive compound annual growth rate (CAGR) of 59.94%, indicating strong past performance. However, it's important to note the significant maximum drawdown of -30.08%, which highlights the potential for substantial short-term losses. This volatility is typical for portfolios with high equity exposure, especially in tech stocks. Investors should be prepared for these fluctuations and consider their risk appetite. While past performance can provide insights, it doesn't guarantee future results, so maintaining a balanced perspective is crucial when assessing historical data.

Projection Info

Utilizing Monte Carlo simulations, this portfolio has been projected with 1,000 different scenarios to estimate future performance. The 50th percentile projects an astonishing 16,170.35% return, while the 5th percentile suggests a more conservative 134.66%. This wide range underscores the uncertainty and potential variability in outcomes. Monte Carlo simulations rely on historical data, which may not fully account for future market conditions or unforeseen events. Investors should use these projections as a guide rather than a guarantee, ensuring they align with personal financial goals and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in equities, with nearly 100% in stocks and a negligible fraction in cash. This lack of diversification across asset classes can lead to increased risk, as the portfolio is highly sensitive to stock market fluctuations. While this focus can drive high returns during bullish markets, it also exposes the investor to greater volatility. To mitigate risk, consider incorporating other asset classes such as bonds, which can offer stability and income, especially during market downturns. A more balanced allocation can enhance the portfolio's resilience.

Sectors Info

  • Technology
    43%
  • Industrials
    19%
  • Utilities
    10%
  • Energy
    9%
  • Telecommunications
    6%
  • Consumer Discretionary
    4%
  • Desconocido
    3%
  • Consumer Staples
    3%
  • Financials
    1%
  • Health Care
    1%

Technology dominates the sectoral allocation at 43.3%, followed by industrials and utilities. This concentration in tech can lead to significant growth potential but also increases vulnerability to sector-specific risks, such as regulatory changes or market saturation. Diversifying into other sectors like healthcare or consumer staples might reduce risk and provide more balanced exposure. A well-diversified sectoral allocation can help protect against downturns in specific industries, ensuring that the portfolio remains robust across different market conditions.

Regions Info

  • North America
    92%
  • Asia Emerging
    5%
  • Desconocido
    3%

The portfolio is heavily concentrated in North America, accounting for over 91% of its geographic allocation. This limited geographic diversification can expose the portfolio to region-specific risks, such as economic downturns or political instability. Expanding exposure to other regions, such as Europe or emerging markets, can provide a hedge against local market volatility and tap into growth opportunities abroad. A more globally diversified portfolio can enhance resilience and potentially improve long-term returns by capturing diverse economic trends.

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 potentially be optimized using the Efficient Frontier, which involves adjusting the allocation of existing assets to achieve the best possible risk-return ratio. This approach focuses on maximizing returns for a given level of risk or minimizing risk for a desired return. By analyzing the current asset mix, the portfolio can be adjusted to improve efficiency without necessarily adding new investments. This optimization can help align the portfolio with the investor's risk tolerance and financial goals, ensuring a more strategic and effective investment approach.

Dividends Info

  • Constellation Energy Corp 0.60%
  • The Coca-Cola Company 2.30%
  • Meta Platforms Inc. 0.20%
  • Royal Caribbean Cruises Ltd 0.20%
  • Texas Pacific Land Trust 1.30%
  • Taiwan Semiconductor Manufacturing 1.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vistra Energy Corp 0.60%
  • Weighted yield (per year) 0.41%

The portfolio's dividend yield is relatively low at 0.41%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation through stock price increases. Investors seeking regular income might consider increasing exposure to dividend-paying stocks or funds. Balancing growth and income can enhance portfolio returns, especially during periods of market volatility when price appreciation may be limited. Reinvesting dividends can also contribute to compounding returns over time.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%

The portfolio's costs are primarily associated with the Vanguard S&P 500 ETF, which has a low expense ratio of 0.03%. This cost-efficiency is beneficial for long-term returns, as lower fees can significantly impact overall performance over time. Investors should continue to monitor and minimize costs across all holdings, considering factors like transaction fees and management expenses. Opting for low-cost investment vehicles can enhance net returns, allowing more of the portfolio's growth to benefit the investor. Regularly reviewing and optimizing costs is a prudent strategy.

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