A growth-focused portfolio with high concentration and significant correlation among large-cap US assets

Report created on Dec 29, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily concentrated in two Schwab ETFs, each making up 40% of the total, and a 20% allocation to ProShares Ultra S&P500. This composition results in a high concentration in large-cap US equities. While this aligns with a growth-oriented strategy, it lacks diversification, as it focuses on a single market segment. To enhance diversification, consider adding assets from different asset classes or regions, which can potentially reduce risk and improve stability.

Growth Info

The portfolio's historical performance has been impressive, with a Compound Annual Growth Rate (CAGR) of 16.88%. However, it also experienced a significant maximum drawdown of -39.48%, indicating vulnerability during market downturns. The performance aligns well with the growth objective but comes with higher risk. To mitigate this, consider introducing less volatile assets that can provide a buffer during market corrections, potentially stabilizing returns over time.

Projection Info

Using Monte Carlo simulations, the portfolio's future potential shows a wide range of outcomes. While the median projection is a substantial 779.45% return, the 5th percentile indicates potential for much lower gains. Monte Carlo simulations use historical data to project potential outcomes, but they can't predict future events with certainty. To balance potential returns and risks, consider reviewing asset allocations periodically and adjusting based on changes in market conditions and personal goals.

Asset classes Info

  • Stocks
    96%
  • Cash
    3%
  • Other
    1%

The portfolio is dominated by stocks, comprising over 95% of the allocation, with minimal exposure to cash and other assets. This heavy stock allocation supports the growth objective, but it also increases risk during market downturns. Diversification across asset classes, such as bonds or real estate, could reduce volatility and offer more stable returns. Assess your risk tolerance and consider gradually incorporating different asset classes to achieve a balanced risk-reward profile.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    12%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    7%
  • Energy
    6%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation shows a strong bias towards technology, making up nearly 30% of the portfolio. While this sector has driven growth in recent years, it can be volatile, especially when interest rates rise. Other sectors like financial services and consumer cyclicals are also represented but to a lesser extent. Consider diversifying into underrepresented sectors to reduce sector-specific risks and potentially capture gains from different economic cycles.

Regions Info

  • North America
    100%

The portfolio is overwhelmingly concentrated in North American assets, accounting for over 99% of the allocation. This geographic focus limits exposure to international markets, which could offer growth opportunities and diversification benefits. Expanding geographic exposure to developed and emerging markets can help mitigate regional risks and take advantage of global economic trends. Consider adding international equities to achieve a more balanced geographic distribution.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    ProShares Ultra S&P500
    High correlation

The portfolio contains highly correlated assets, particularly between Schwab U.S. Large-Cap Growth ETF and ProShares Ultra S&P500. High correlation means these assets tend to move together, limiting diversification benefits. Reducing correlation by including assets with different risk profiles or market behaviors can enhance portfolio resilience. Consider reallocating to less correlated assets to achieve better diversification and potentially lower overall risk.

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 current setup could benefit from optimization through the Efficient Frontier, which aims to achieve the best possible risk-return ratio. However, the high correlation among assets suggests limited diversification. Before optimizing, consider reducing overlap in asset holdings and diversifying across different sectors and geographies. This approach could enhance the portfolio's efficiency, aligning risk and return more closely with your investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • ProShares Ultra S&P500 0.60%
  • Weighted yield (per year) 1.72%

The portfolio's dividend yield stands at 1.72%, primarily driven by the Schwab U.S. Dividend Equity ETF. While dividends provide a steady income stream, growth-focused portfolios typically prioritize capital appreciation over income. Ensure the dividend yield aligns with your investment goals. If income is not a priority, consider reallocating to growth-oriented assets with lower yields but higher potential for capital gains.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • ProShares Ultra S&P500 0.91%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, with the ProShares Ultra S&P500 ETF contributing significantly at 0.91%. Keeping costs low is crucial for maximizing long-term returns. Explore options to replace high-fee ETFs with similar lower-cost alternatives. This can improve net returns over time, especially in a growth-focused portfolio where every basis point saved contributes to compounding gains.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey