Growth-Oriented Portfolio with Low Diversity and High Risk for Bold Investors

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a growth-oriented mindset, seeking high returns and willing to accept higher risk. Ideal for those with long-term investment horizons, it appeals to individuals comfortable with market volatility. With a focus on capital appreciation, this investor prioritizes potential gains over immediate income. They are typically proactive, regularly monitoring and adjusting their portfolio to align with changing market conditions. This investor values a strategic approach, balancing growth potential with risk management to achieve their financial goals.

Positions

  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    12.50%
  • Chevron Corp
    CVX - US1667641005
    12.50%
  • JPMorgan Chase & Co
    JPM - US46625H1005
    12.50%
  • SPDR® S&P MIDCAP 400 ETF Trust
    MDY - US78467Y1073
    12.50%
  • Invesco Aerospace & Defense ETF
    PPA - US46137V1008
    12.50%
  • Visa Inc. Class A
    V - US92826C8394
    12.50%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    12.50%
  • Health Care Select Sector SPDR® Fund
    XLV - US81369Y2090
    12.50%

The portfolio consists of a balanced mix of ETFs and common stocks, each representing 12.5% of the total. This composition reflects a strong inclination towards growth, with a significant portion allocated to various sectors. Although the portfolio covers multiple sectors, the low diversity classification suggests a concentrated investment approach. This lack of diversification may increase risk, as the portfolio's performance heavily depends on the success of specific sectors or companies. To enhance resilience, consider diversifying across more sectors or asset classes.

Growth Info

Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 17.82%. However, it also experienced a significant maximum drawdown of -39.66%, indicating potential volatility. The fact that just 13 days contributed to 90% of the returns highlights the importance of timing in this investment strategy. While the high CAGR is attractive, the associated volatility suggests that investors should be prepared for potential fluctuations. To mitigate risk, it's advisable to consider strategies that balance growth with stability.

Projection Info

Using a Monte Carlo simulation, we project potential future outcomes based on a hypothetical initial investment. This model runs numerous simulations to estimate a range of possible returns. The median projection shows a 614.97% increase, while the 5th percentile indicates a 25.45% gain, and the 67th percentile suggests a 1,034.7% increase. With 963 out of 1,000 simulations yielding positive returns, the portfolio appears promising. However, the wide range of outcomes underscores the inherent uncertainty. It's crucial to maintain a long-term perspective and prepare for various scenarios.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is heavily weighted towards stocks, with 99.91% allocated to this asset class. This concentration indicates a strong growth focus, which can offer substantial returns over time. However, the lack of diversification into other asset classes, such as bonds or real estate, may increase vulnerability to market fluctuations. Incorporating a broader range of asset classes could help balance risk and reward. By diversifying, investors can potentially reduce volatility and enhance the portfolio's resilience against market downturns.

Sectors Info

  • Financials
    31%
  • Technology
    16%
  • Industrials
    16%
  • Energy
    15%
  • Health Care
    14%
  • Consumer Discretionary
    4%
  • Basic Materials
    1%
  • Consumer Staples
    1%
  • Real Estate
    1%
  • Telecommunications
    0%
  • Utilities
    0%

The portfolio's sector allocation is concentrated, with significant exposure to financial services, technology, and industrials. These sectors collectively account for over 60% of the portfolio. While this concentration can drive growth during sector booms, it also poses a risk if these sectors underperform. The limited exposure to other sectors, such as consumer cyclicals and healthcare, suggests an opportunity to diversify. By spreading investments across a wider array of sectors, the portfolio could achieve a more balanced risk-return profile, reducing dependence on any single sector.

Regions Info

  • North America
    99%
  • Africa/Middle East
    0%
  • Europe Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographically, the portfolio is predominantly focused on North America, with 99.3% of assets allocated to this region. This concentration suggests a strong reliance on the U.S. market, which can be advantageous in times of economic growth. However, it also exposes the portfolio to regional risks, such as economic downturns or regulatory changes. To mitigate these risks, consider diversifying into other regions. Expanding geographic exposure can provide access to different markets and economic conditions, potentially enhancing the portfolio's resilience and growth potential.

Redundant positions Info

  • Avantis® U.S. Small Cap Value ETF
    SPDR® S&P MIDCAP 400 ETF Trust
    High correlation

Within the portfolio, certain assets, like the Avantis® U.S. Small Cap Value ETF and SPDR® S&P MIDCAP 400 ETF Trust, exhibit high correlation. This means they tend to move in the same direction, which can amplify both gains and losses. While correlated assets can enhance returns during market upswings, they also increase risk during downturns. To reduce this risk, consider including assets with low or negative correlations. Diversifying with uncorrelated assets can help stabilize the portfolio, providing a buffer against market volatility and enhancing risk-adjusted returns.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Chevron Corp 3.00%
  • JPMorgan Chase & Co 1.90%
  • SPDR® S&P MIDCAP 400 ETF Trust 1.10%
  • Invesco Aerospace & Defense ETF 0.50%
  • Visa Inc. Class A 0.50%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Health Care Select Sector SPDR® Fund 1.60%
  • Weighted yield (per year) 1.34%

The portfolio's dividend yield is 1.34%, with contributions from various holdings like Chevron Corp at 3% and JPMorgan Chase & Co at 1.9%. While the yield provides some income, it's relatively low, reflecting the growth-oriented nature of the portfolio. Investors seeking higher income may consider increasing exposure to dividend-paying assets. Balancing growth with income can enhance the portfolio's overall return potential. By incorporating more dividend-focused investments, the portfolio can achieve a more stable income stream, complementing its growth objectives.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR® S&P MIDCAP 400 ETF Trust 0.24%
  • Invesco Aerospace & Defense ETF 0.58%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Health Care Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is relatively low and beneficial for long-term growth. Low costs are crucial for maximizing returns, as they minimize the drag on performance. However, some individual positions, like the Invesco Aerospace & Defense ETF, have higher expense ratios. To optimize costs, consider periodically reviewing and rebalancing the portfolio. By focusing on cost-effective investments, the portfolio can maintain its growth potential while minimizing expenses. Keeping costs low is a key strategy for enhancing long-term returns.

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.

Portfolio optimization isn't recommended due to overlapping assets with high correlation. Instead, focus on enhancing diversification to reduce risk. Consider reallocating investments to achieve a more balanced mix of asset classes and sectors. By moving along the efficient frontier, investors can adjust their risk profile. A riskier portfolio may include more equities, while a conservative one might incorporate bonds. Prioritize diversification and cost management to improve the portfolio's risk-return balance. This strategic approach can enhance performance and resilience over time.

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