A high-risk speculative portfolio with significant cryptocurrency exposure and moderate diversification

Report created on Dec 16, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of a mix of common stock, ETFs, and a significant portion (50%) in cryptocurrency trusts. The largest holdings are in Grayscale Bitcoin and Ethereum Trusts, each at 25%, followed by SPDR S&P 500 ETF Trust and ProShares UltraPro QQQ. This composition indicates a speculative approach, focusing heavily on cryptocurrencies and US equities. The portfolio's balance between aggressive growth and traditional assets provides an opportunity for high returns but also exposes it to substantial risk. It's important to assess whether this aligns with your risk tolerance and financial goals.

Growth Info

Historically, the portfolio has delivered a remarkable CAGR of 68.68%, reflecting its aggressive nature. However, the max drawdown of -78.58% highlights the potential for significant losses. This volatility is common with high-risk investments, especially those with substantial cryptocurrency exposure. While the past performance may seem attractive, it's crucial to remember that historical returns do not guarantee future results. Consider diversifying further or rebalancing to mitigate risks and enhance stability, particularly if a similar downturn occurs.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, this portfolio shows a wide range of future possibilities. The median projection suggests a 109.31% return, but there's also a 5th percentile outcome of -99.5%, indicating a total loss. This variance underscores the high-risk nature of the portfolio. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold true. Consider stress testing your portfolio under various scenarios to better understand potential outcomes.

Asset classes Info

  • Stocks
    70%
  • Other
    25%
  • Cash
    4%

The portfolio's asset allocation heavily leans toward stocks at 70.21%, with significant holdings in cryptocurrencies categorized as "Other." Cash makes up a minor portion, while bonds are almost negligible. This allocation suggests a focus on growth assets, offering potential for high returns but also increased volatility. Diversifying into more asset classes, such as bonds or real estate, could provide a buffer against market fluctuations and enhance stability. Balancing growth with income-generating assets might align better with long-term financial objectives.

Sectors Info

  • No data
    25%
  • Technology
    16%
  • Consumer Staples
    9%
  • Consumer Discretionary
    5%
  • Financials
    5%
  • Telecommunications
    5%
  • Health Care
    4%
  • Industrials
    3%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation shows a concentration in technology and consumer defensive sectors, with exposure to various other sectors like financial services and healthcare. However, 25% of the portfolio is in "Unknown" sectors, likely representing cryptocurrency holdings. This concentration in specific sectors, particularly the volatile tech industry, increases risk. To achieve better diversification, consider reallocating towards sectors that are less correlated, such as utilities or real estate, which can provide stability during market downturns.

Regions Info

  • North America
    44%
  • No data
    25%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with limited exposure to other regions like Europe and Asia. This concentration may limit the benefits of global diversification, increasing vulnerability to region-specific economic downturns. Expanding geographic exposure can help mitigate risks associated with regional market fluctuations and potentially uncover growth opportunities in emerging markets. Consider incorporating more international equities or funds to achieve a more balanced global allocation.

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 benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. By adjusting allocations among existing holdings, you can potentially improve efficiency without adding new assets. This process involves analyzing historical returns and volatility to identify an optimal mix. While it doesn't guarantee higher returns, it can help align the portfolio with your risk tolerance and financial goals. Regularly revisiting this analysis ensures the portfolio remains aligned with market conditions.

Dividends Info

  • SPDR S&P 500 ETF Trust 0.80%
  • ProShares UltraPro QQQ 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Consumer Staples Select Sector SPDR® Fund 2.60%
  • Weighted yield (per year) 0.69%

The portfolio's dividend yield is relatively low at 0.69%, reflecting its focus on growth rather than income. While some holdings like the Vanguard Total International Stock Index Fund offer higher yields, cryptocurrencies and tech-heavy ETFs provide minimal income. If income generation is a goal, consider increasing allocations to dividend-focused funds or stocks. This approach can provide a steady cash flow, potentially offsetting some volatility and contributing to long-term wealth accumulation.

Ongoing product costs Info

  • Grayscale Bitcoin Trust (BTC) 1.50%
  • SPDR S&P 500 ETF Trust 0.10%
  • ProShares UltraPro QQQ 0.88%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.52%

The portfolio's total expense ratio is 0.52%, with the Grayscale Bitcoin Trust being the most costly at 1.5%. High costs can erode returns over time, especially in volatile markets. Reducing costs by switching to lower-fee funds or ETFs can enhance net returns. Consider exploring alternative investment vehicles with similar exposure but lower fees to optimize cost efficiency. Regularly reviewing and minimizing fees is a crucial step in maximizing long-term portfolio growth.

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