A highly concentrated portfolio with a strong focus on US equities and technology
Report created on Apr 14, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
50 Amundi Index Solutions - Amundi S&P 500 UCITS ETF C EUR
500 - LU1681048804 60.00% -
EQ Invesco EQQQ NASDAQ-100 UCITS ETF
EQQQ - IE0032077012 40.00%
The portfolio is heavily concentrated in two ETFs: Amundi S&P 500 UCITS ETF (60%) and Invesco EQQQ NASDAQ-100 UCITS ETF (40%). This composition leans heavily towards large-cap US equities, reflecting a growth-oriented strategy. While this setup can drive significant returns during bullish markets, it also exposes the portfolio to higher volatility and sector-specific risks. Comparing this to a more diversified benchmark, the portfolio lacks exposure to other asset classes and geographic regions. A more balanced distribution across different asset types could potentially mitigate risk and enhance stability.
Growth
Historically, the portfolio has demonstrated strong performance with a CAGR of 13.38%, indicating robust growth over time. However, it also experienced a maximum drawdown of -31.68%, which highlights the potential for significant losses during market downturns. This performance is in line with the high-risk, high-reward nature of a growth-focused investment strategy. When compared to a diversified benchmark, the portfolio's returns are impressive but come with increased volatility. Investors may consider their risk tolerance and market outlook when evaluating this performance.
Projection
The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns for this portfolio. With a 50th percentile projection of 467.1% and a 67th percentile of 681.8%, the analysis indicates a strong likelihood of positive returns, as 991 out of 1,000 simulations showed gains. However, the 5th percentile projection at 72.8% reflects the inherent uncertainty in future performance. It's important to remember that past data doesn't guarantee future results, and investors should be prepared for varying outcomes.
Asset classes
- Stocks 100%
The portfolio's asset allocation is entirely in stocks, lacking diversification across different asset classes such as bonds, real estate, or commodities. This 100% equity exposure aligns with a high-risk, high-return strategy, but it also increases vulnerability to market fluctuations. In contrast, a diversified benchmark typically includes a mix of asset classes to balance risk and reward. Incorporating other asset types could reduce volatility and provide a cushion during market downturns, potentially improving risk-adjusted returns.
Sectors
- Technology 33%
- Health Care 11%
- Financials 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 7%
- Consumer Discretionary 7%
- Consumer Discretionary 5%
- Energy 4%
- Basic Materials 2%
- Utilities 2%
- Real Estate 1%
The portfolio is heavily weighted towards the technology sector, comprising 33% of the total allocation. Other significant sectors include healthcare (11%) and financial services (10%). This concentration in tech can lead to higher volatility, especially during periods of interest rate changes or regulatory shifts. Compared to a diversified benchmark, this portfolio is more exposed to sector-specific risks. Investors might consider diversifying across more sectors to reduce potential volatility and enhance stability, especially if market conditions change.
Regions
- North America 99%
- Europe Developed 1%
Geographically, the portfolio is overwhelmingly focused on North America, with 99% of assets allocated there. This concentration limits exposure to other regions, such as Europe or emerging markets, which can offer different growth opportunities and risk profiles. A more geographically diversified portfolio would align closer to global benchmarks and could reduce risk by spreading exposure across various economic environments. Investors seeking to mitigate regional risks might explore adding assets with exposure to international markets.
Market capitalization
- Mega-cap 51%
- Large-cap 35%
- Mid-cap 13%
The portfolio is predominantly invested in mega-cap (51%) and big-cap (35%) stocks, with a smaller allocation to mid-cap (13%) stocks. This focus on larger companies typically provides stability and less volatility compared to small-cap stocks. However, it also limits potential high-growth opportunities that smaller companies might offer. A more balanced allocation across various market capitalizations could enhance diversification and capture growth potential from different segments of the market.
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 allocation could be optimized along the Efficient Frontier, which represents the best possible risk-return ratio. By adjusting the weightings within the existing asset choices, the portfolio might achieve a more favorable balance between risk and return. This approach focuses on maximizing returns for a given level of risk, rather than simply diversifying across more assets. Investors should consider reviewing their risk tolerance and goals to determine if optimization would better align with their investment strategy.
Ongoing product costs
- Amundi Index Solutions - Amundi S&P 500 UCITS ETF C EUR 0.15%
- Invesco EQQQ NASDAQ-100 UCITS ETF 0.35%
- Weighted costs total (per year) 0.23%
The total expense ratio (TER) of the portfolio is 0.23%, which is relatively low and beneficial for long-term performance. Lower costs mean more of your returns are retained, compounding over time. This aligns well with best practices for cost-efficient investing. However, investors should remain vigilant about any changes in fees and explore opportunities to further minimize costs, potentially through alternative low-cost funds or direct investments, to enhance net returns.
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