Growth-focused portfolio with high concentration in technology and minimal diversification
Report created on Oct 21, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 70.00% -
XL Technology Select Sector SPDR® Fund
XLK - US81369Y8030 30.00%
This portfolio is heavily concentrated, with 70% in the Invesco NASDAQ 100 ETF and 30% in the Technology Select Sector SPDR® Fund. Both ETFs focus on technology, leading to a significant overlap in holdings and sectors. Despite a growth-oriented risk profile, the low diversification score indicates a potential vulnerability to sector-specific risks.
Growth
Historically, this portfolio has shown impressive growth, boasting a Compound Annual Growth Rate (CAGR) of 18.76%. However, the maximum drawdown of -34.52% signifies substantial volatility, especially during market downturns. The concentration in high-growth sectors contributes to both the high returns and increased risk.
Projection
Monte Carlo simulations suggest a wide range of potential outcomes, from a 170.7% to 1,644.9% increase in portfolio value at key percentiles. While the majority of simulations predict positive returns, the high variance underscores the risk associated with the portfolio's lack of diversification.
Asset classes
- Stocks 100%
The portfolio is entirely invested in stocks, with no allocation to bonds, real estate, or other asset classes that could mitigate risk. This singular focus on equities, particularly within technology, magnifies both potential gains and losses, making the portfolio more susceptible to market fluctuations.
Sectors
- Technology 68%
- Telecommunications 12%
- Consumer Discretionary 9%
- Consumer Staples 3%
- Health Care 3%
- Industrials 2%
- Utilities 1%
- Basic Materials 1%
Technology dominates the portfolio at 68%, followed by smaller allocations to communication services and consumer cyclicals. This sector concentration increases exposure to industry-specific risks, such as regulatory changes or technological shifts, which could disproportionately impact overall performance.
Regions
- North America 98%
- Europe Developed 1%
With 98% of assets allocated to North America, primarily the United States, the portfolio has minimal exposure to international markets. This geographic concentration limits potential benefits from global diversification, such as reduced volatility and access to growth in emerging markets.
Market capitalization
- Mega-cap 53%
- Large-cap 36%
- Mid-cap 11%
The portfolio's focus on mega (53%) and big (36%) cap stocks provides some stability due to the established nature of these companies. However, the minimal exposure to medium and no exposure to small cap stocks restricts opportunities for higher growth rates typically found in smaller companies.
Redundant positions
-
High correlationInvesco NASDAQ 100 ETFTechnology Select Sector SPDR® Fund
The high correlation between the Invesco NASDAQ 100 ETF and the Technology Select Sector SPDR® Fund indicates redundancy, with both targeting similar sectors and companies. This redundancy fails to add diversification benefits, which are crucial for reducing risk without sacrificing 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.
Click on the colored dots to explore allocations.
Optimizing for the Efficient Frontier could improve the portfolio's risk-return profile. Currently, the high correlation between holdings limits diversification benefits. Adjusting asset allocation to include less correlated investments might achieve better efficiency, enhancing returns for the same level of risk.
Dividends
- Invesco NASDAQ 100 ETF 0.50%
- Technology Select Sector SPDR® Fund 0.50%
- Weighted yield (per year) 0.50%
A uniform dividend yield of 0.50% across both ETFs contributes modestly to the portfolio's total returns. While not the focus for growth-oriented investors, dividends provide a small buffer during market dips, offering a slight diversification in income sources.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- Technology Select Sector SPDR® Fund 0.09%
- Weighted costs total (per year) 0.13%
The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.13%. Lower costs are crucial for enhancing long-term returns, especially in growth-focused portfolios where the compounding effect can significantly impact the final investment value.
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