A tech-heavy growth portfolio with strong historic performance and moderate geographic diversification

Report created on Dec 31, 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 ETFs, with a significant focus on the technology sector through the iShares S&P 500 Information Technology ETF, which makes up 40% of the portfolio. The remaining 60% is divided between the iShares Core S&P 500 ETF and the Vanguard FTSE All-World ETF, each contributing 30%. This composition leans heavily towards equities, reflecting a growth-oriented strategy. While this structure supports significant growth potential, it also introduces higher volatility. Consider balancing this with more diverse asset classes to mitigate risk.

Growth Info

The portfolio has shown impressive historical performance, boasting a Compound Annual Growth Rate (CAGR) of 17.45%. This is a strong indicator of past success, especially compared to typical market benchmarks. However, the maximum drawdown of -27.12% highlights potential risks during market downturns. While historical performance is promising, it's important to remember that it doesn't guarantee future results. Diversifying further could help reduce the impact of future drawdowns and maintain steady returns.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a positive outlook for the portfolio. With 1,000 simulations, the median return projects a growth of 749.08%, and an annualized return of 17.89%. This indicates robust potential, though it's crucial to note that simulations rely on past data and assumptions. While the high number of positive simulations is encouraging, consider that market conditions can change, and diversifying risk remains a wise strategy to protect against unforeseen events.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, with 99.85% allocated to equities. This one-dimensional asset class focus aligns with a growth strategy but lacks the diversification typically recommended for risk management. While equities offer high growth potential, incorporating other asset classes like bonds or real estate could provide a buffer during market volatility. This could enhance the portfolio's resilience and stability, especially in times of economic uncertainty.

Sectors Info

  • Technology
    58%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Telecommunications
    5%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is heavily skewed towards technology, comprising nearly 58% of the portfolio. While this sector has driven substantial growth, it also subjects the portfolio to higher volatility, particularly during periods of economic uncertainty or regulatory changes. Other sectors like financial services and consumer cyclicals are underrepresented. To mitigate risk, consider diversifying across a broader range of sectors, which can help cushion the portfolio against sector-specific downturns.

Regions Info

  • North America
    89%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic allocation is predominantly in North America, with 89.27% exposure, leaving limited diversification across other regions. This heavy concentration may expose the portfolio to regional economic risks. Diversifying into regions like Europe, Asia, or emerging markets could enhance global exposure and reduce dependency on North American markets. This broader diversification can help capture growth opportunities in different economic cycles and improve overall portfolio stability.

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, a concept that helps identify the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve the desired balance. While the existing portfolio is growth-focused, exploring different allocations could enhance returns while managing risk. Remember, optimization is based on current assets and doesn't necessarily imply diversification. It aims to maximize returns for a given level of risk.

Dividends Info

  • iShares VII PLC - iShares Core S&P 500 UCITS ETF 1.00%
  • Weighted yield (per year) 0.30%

The portfolio's overall dividend yield is modest at 0.3%, with the iShares Core S&P 500 ETF contributing a 1.0% yield. While dividends provide a steady income stream, this portfolio prioritizes growth over income. For investors seeking income, it may be beneficial to explore options with higher dividend yields. However, for those focused on growth, maintaining a lower yield can be advantageous by reinvesting earnings to compound returns over time.

Ongoing product costs Info

  • iShares VII PLC - iShares Core S&P 500 UCITS ETF 0.10%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.16%

With a Total Expense Ratio (TER) of 0.16%, the portfolio is cost-efficient, enhancing long-term returns. Low costs mean more of your investment's growth is retained, a key factor in compounding wealth over time. This aligns well with best practices in portfolio management. Regularly reviewing and comparing these costs against similar investment options can ensure ongoing cost-effectiveness. Keeping expenses low is a positive aspect that supports the portfolio's overall performance.

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