A high-growth portfolio with significant technology exposure and limited geographic diversification

Report created on Dec 15, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is evenly split between two major ETFs: Invesco NASDAQ 100 ETF and SPDR® Portfolio S&P 500 ETF, both heavily weighted in equities. This composition leans towards growth, focusing on the performance of large-cap stocks. While this setup can offer substantial returns, it also increases exposure to market volatility. A more balanced inclusion of other asset types, like bonds or international equities, could mitigate some of the risks associated with such a concentrated equity focus.

Growth Info

Historically, the portfolio has delivered a robust compound annual growth rate (CAGR) of 16.6%, indicating strong past performance. However, with a maximum drawdown of -29.55%, it's clear that the portfolio is susceptible to significant market downturns. This historical performance shows the potential for high returns, but also highlights the need for risk management strategies. Diversifying into less volatile assets could help cushion the portfolio during market corrections.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio shows a median projected growth of 754.6%. This optimistic projection suggests strong future performance but should be taken with caution, as simulations rely on historical trends that may not predict future market conditions accurately. Consider regularly reviewing the portfolio to adapt to changing market dynamics and adjust asset allocation as needed.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for nearly 100% of its composition, with a negligible cash position. This heavy leaning towards equities suggests a high-risk, high-reward strategy typical of growth-focused portfolios. Adding other asset classes like bonds, real estate, or commodities could enhance diversification, potentially smoothing out returns and reducing overall portfolio risk.

Sectors Info

  • Technology
    42%
  • Telecommunications
    13%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Financials
    7%
  • Consumer Staples
    6%
  • Industrials
    6%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

A significant portion of the portfolio is concentrated in the technology sector, making up over 42% of the total allocation. While this can drive growth, it also exposes the portfolio to sector-specific risks. Balancing this concentration with increased exposure to underrepresented sectors like utilities or real estate could provide a buffer against sector downturns and improve overall stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic allocation is heavily skewed towards North America, with over 98% exposure. This lack of geographic diversification could be a vulnerability if regional markets face downturns. Expanding investments to include more international markets, particularly in emerging economies, could offer new growth opportunities and reduce regional risk exposure.

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.

Utilizing the Efficient Frontier concept, the portfolio could potentially be optimized to achieve a better risk-return ratio. This involves adjusting the allocation between existing assets to find the most efficient balance. While this optimization won't necessarily enhance diversification, it can help maximize returns for a given level of risk, aligning more closely with the investor's risk tolerance and financial goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.90%

The portfolio's dividend yield is relatively low at 0.9%, reflecting its growth orientation. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. Investors seeking higher income might consider adding dividend-focused assets, which could enhance cash flow without significantly altering the growth strategy.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.08%

The portfolio's costs are relatively low, with a total expense ratio (TER) of 0.08%. Low costs can significantly boost long-term returns by minimizing the drag on performance. Maintaining this cost efficiency is crucial, but investors should also be open to slightly higher fees if it means achieving better diversification or access to unique growth opportunities.

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