Balanced Tech-Heavy Portfolio with High Correlation and Moderate Diversification for Long-Term Growth

Report created on Dec 2, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of a variety of ETFs and individual stocks, with a significant focus on technology-related assets. This tech-heavy allocation makes up nearly half of the portfolio, indicating a strong belief in the sector's growth potential. While the portfolio does have a good mix of ETFs and stocks, the concentration in technology could expose it to sector-specific risks. Balancing these tech assets with investments in other sectors could help mitigate potential downturns and provide more stability.

Growth Info

Historically, the portfolio has shown a solid CAGR of 11.1%, reflecting strong growth over time. However, it also experienced a maximum drawdown of -25.98%, indicating vulnerability during market downturns. This performance suggests that while the portfolio has the potential for high returns, it also carries significant risk, particularly in volatile markets. To enhance stability, incorporating more defensive or less correlated assets could help reduce the impact of large drawdowns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was assessed. The simulation suggests a median growth of 206.78%, with a positive outcome in 937 simulations. The annualized return across all simulations is 10.19%, indicating a strong potential for future growth. However, the downside risk is evident in the 5th percentile, showing a potential loss of -7.47%. Diversifying further could help improve the portfolio's resilience against such adverse scenarios.

Asset classes Info

  • Stocks
    99%
  • Bonds
    1%

The portfolio is heavily weighted in stocks, accounting for over 98% of the allocation, with minimal exposure to bonds and cash. This skew towards equities suggests a high-risk, high-reward strategy, suitable for those seeking capital appreciation over income stability. Introducing more fixed-income securities could provide balance, offering a cushion during market volatility and potentially stabilizing returns over time.

Sectors Info

  • Technology
    47%
  • Financials
    16%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Real Estate
    5%
  • Health Care
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    1%

Sector allocation is dominated by technology at 47.26%, followed by financial services and consumer cyclicals. While this concentration might benefit from tech sector growth, it also increases vulnerability to sector-specific downturns. A more balanced sector allocation could enhance diversification and reduce risk. Exploring opportunities in underrepresented sectors like utilities or consumer defensives might offer a smoother performance across different market cycles.

Regions Info

  • North America
    89%
  • Asia Developed
    3%
  • Asia Emerging
    3%
  • Europe Developed
    1%
  • Africa/Middle East
    1%
  • Japan
    1%
  • Latin America
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is predominantly invested in North America, accounting for over 89% of the allocation. This focus on a single region may limit exposure to global growth opportunities and increase vulnerability to regional economic downturns. Expanding investments into other regions could capture diverse growth prospects and enhance overall portfolio resilience. A more global approach might also mitigate risks associated with regional market fluctuations.

Redundant positions Info

  • Technology Select Sector SPDR® Fund
    Schwab U.S. Large-Cap ETF
    Invesco QQQ Trust
    SPDR® Portfolio S&P 500 ETF
    High correlation

The portfolio includes several highly correlated assets, particularly within the technology sector. This high correlation means these assets tend to move in the same direction, reducing the diversification benefits. By identifying and reducing these overlaps, the portfolio could achieve better risk-adjusted returns. Incorporating less correlated assets from different sectors or asset classes could enhance diversification and improve overall portfolio performance.

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.

Before optimizing, reducing highly correlated assets could enhance diversification. To achieve a more efficient portfolio, consider reallocating towards less correlated sectors or asset classes. This could improve the portfolio's risk-adjusted return. Moving along the efficient frontier, one can adjust the risk level by increasing or decreasing exposure to more stable or riskier assets. This approach helps tailor the portfolio to specific risk preferences, potentially enhancing returns without significantly altering risk.

Dividends Info

  • Apple Inc 0.40%
  • Arbor Realty Trust Inc | 6.375% Series D Cumulative 8.30%
  • iShares MSCI Global Min Vol Factor ETF 2.10%
  • Blackstone Secured Lending Fund 9.50%
  • Cambria Emerging Shareholder Yield ETF 3.90%
  • Oaktree Specialty Lending Corp 13.90%
  • Invesco VRDO Tax-Free ETF 2.80%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Large-Cap ETF 2.30%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • SPDR® Portfolio S&P 600 Small Cap ETF 1.70%
  • Cambria Shareholder Yield ETF 1.70%
  • Technology Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 2.89%

The portfolio's dividend yield stands at 2.89%, with significant contributions from high-yielding assets like Oaktree Specialty Lending Corp and Arbor Realty Trust. This yield provides a steady income stream, appealing to investors seeking both growth and income. However, the reliance on a few high-yield stocks could pose risks if these companies face financial difficulties. Diversifying dividend sources across more stable sectors could ensure a more consistent income flow.

Ongoing product costs Info

  • iShares MSCI Global Min Vol Factor ETF 0.20%
  • Cambria Emerging Shareholder Yield ETF 0.66%
  • Invesco VRDO Tax-Free ETF 0.25%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Large-Cap ETF 0.03%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • SPDR® Portfolio S&P 600 Small Cap ETF 0.03%
  • Cambria Shareholder Yield ETF 0.59%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.13%

With a Total Expense Ratio (TER) of 0.13%, the portfolio is cost-efficient, minimizing the drag on returns. Low-cost ETFs like the SPDR® Portfolio S&P 500 ETF and Schwab U.S. Large-Cap ETF contribute to the portfolio's cost-effectiveness. Keeping investment costs low is crucial for maximizing net returns over time. Ensuring that all investment options remain cost-effective should continue to be a priority to maintain overall portfolio efficiency.

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